The Bank of Japan (日本銀行 or Nippon Ginkou in the original, occasionally abbreviated Nichigin in the vernacular) is the central bank of Japan.


Like so many other modern Japanese institutions, the Bank of Japan was born after the Meiji Restoration. Prior to the Restoration, Japan's feudal fiefs all issued their own money in an array of incompatible denominations, but the New Currency Act of Meiji 4 (1871) did away with these and established the yen as the new decimal currency. The former kingdoms became prefectures and their mints became private chartered banks -- but they kept on, quite literally, printing money! For a time, both the central government and these so-called "national" banks issued money, and chaos was rife. To put a stop to this, the Bank of Japan was founded on Meiji 15 (1882) and given a monopoly on controlling the money supply.

The Bank of Japan issued its first banknotes on Meiji 18 (1885), and despite some small glitches -- for example, it turned out that the konnyaku powder mixed in the paper to prevent counterfeiting made the bills a delicacy for rats -- the run was largely successful. In 1897 Japan joined the gold standard and in 1899 the former "national" banknotes were formally obsoleted.

The Bank of Japan has kept on running ever since, except a brief post-WW2 hiatus when the Allies issued military currency and restructured the Bank into a more independent entity. Still, by Western standards and despite a major 1997 rewrite of the Bank of Japan Law (日本銀行法) intended to give it more independence, the Bank is very much a lackey of the politicians who continue to dictate monetary policy. This is enshrined in the Law itself, article 4 of which states:

In recognition of the fact that currency and monetary control is a component of overall economic policy, the Bank of Japan shall always maintain close contact with the government and exchange views sufficiently, so that its currency and monetary control and the basic stance of the government's economic policy shall be mutually harmonious.

According to its charter, the missions of the BOJ are:

  1. Issuance and Management of Banknotes
  2. Implementation of Monetary Policy
    • most notably the 0% interest rate policy of the 1990s, a good idea which has so far entirely failed to help lift Japan out of its prolonged recession
  3. Providing Settlement Services and Ensuring the Stability of the Financial System
  4. Treasury and Government Securities-Related Operations
  5. International Activities
    • meaning not just hobnobbing with the IMF, but also active intervention on the currency markets if the value of the yen is felt to be too low or too high
  6. Compilation of Data, Economic Analyses and Research Activities
    • above all the Tanki Keizai Kansoku (短期経済観測) aka Tankan (短観), the "Short-Period Economy Observation" poll used to monitor business sentiment

The Bank of Japan is headquartered in Nihonbashi, Tokyo, on the site of a former gold mint and, not coincidentally, near the famous Ginza district whose name means "silver mint". Despite featuring a neo-Baroque building from 1896, the Tokyo headquarters is a bit off the tourist track, and it's the Osaka branch in Nakanoshima that tends to draw the crowds.


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