Masaaki Shirakawa

BOJ Governor ShirakawaMasaaki Shirakawa (b. September 27, 1949) is the current Governor of the Bank of Japan, the central bank of Japan. Formerly an economist and banker, Shirakawa is the head of the BOJ and serves to oversee the institution in charge of maintaining Japanese financial stability and growth. Shirakawa is also a director of the Bank for International Settlements. Newsweek magazine ranked Shirakawa sixth on the list of most powerful individuals in the world, behind Ben Bernanke and Jean-Claude Trichet.

As Governor, Shirakawa is the chief individual in charge of Japanese monetary policy. He is also the official representative of the Bank of Japan abroad, particularly during the annual G20 summits.

Before beginning his term, Shirakawa was with the Bank for 36 years, save for a two-year period on faculty at the graduate school at Kyoto University. He was nominated for the position and confirmed in April, 2008 as the 30
th Governor of the Bank of Japan since the bank’s inception. His predecessor was Toshihiko Fukui. Shirakawa’s term ends in April, 2013, at which time he will be eligible for another term.

Shirakawa took office only months before the financial crisis of 2008, in which strained credit markets collapsed and caused massive economic unrest and a recession across the globe. As such, his term as Governor has been preoccupied with the fallout from that crisis and the ongoing recovery. Like most governors of the Bank of Japan, Shirakawa is also responsible for controlling deflation that has negatively impacted Japan’s economy for well over a decade. The issue of currency manipulation has also posed a challenge for his administration, especially considering the drastic measures the Bank of Japan has taken in order to devalue the yen, thereby making it more attractive for investors and importers who want affordable products.

Governor Shirakawa has developed a reputation for somewhat-unconventional approaches to combating the financial crisis. He initiated a controversial corporate debt-buying program similar to the one enacted under the TARP program in the United States. Japan has since eased out of the program.

The Governor is perhaps best known for his support of devaluation policies that have artificially lowered the value of the yen against other major currencies. As a result, critics claim, deflation has continued and the export-centric nation has suffered. Furthermore, world leaders have decried his support for currency manipulation, a major point of contention at the 2010 G20 Summit. Supporters claim that Shirakawa is a decisive leader who acts pragmatically in a difficult situation and has managed to help point Japan to the road of recovery.

Since Shirakawa’s term began, USD/JPY has fallen from 104.16 to 81.47, meaning it has appreciated in value by 22%. Critics have used this to criticize Shirakawa, since a more valuable yen is potentially harmful to a nation so dependent on exports and having a currency that is affordable to importers. Others have pointed to this gain as a sign of a strengthening Japanese economy, thereby lending support to the governor’s actions.

 



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