“It is better for the Bank of Japan not to attract attention and remain as quit as the forest in a rural shrine.” – Hisato Ichimada, the 18th Governor of the Bank of Japan, 1946-1954 (Werner 2003: 70)
“Thanks to this recession everyone is becoming conscious of the need to implement economic transformation.” – Yasushi Mieno, the 26th Governor of the Bank of Japan, 1989-1994 (Werner 2003: 175)
In 2003, Richard Werner (University of Southampton) published a book Princes of the Yen: Japan’s Central Bankers and the Transformation of the Economy, which skillfully cut through the complex jargon of economists and offered a new look at Japan’s post-war economy and the key factors that shaped it. Professor Werner’s book, who was a visiting researcher at the Bank of Japan during the 90s crash (when the stock market dropped by 80% and house prices by up to 84%), gives special emphasis to the 1980s and 1990s when Japan’s economy experienced vast swings in activity, and explains how the asset price bubble has been inflated due to the Bank of Japan credit creation policy. The book also analyzes the intra-state politics of institutional competition between the Ministry of Finance and the Bank of Japan. According to the author, the upheaval in the Japanese economy at the beginning of the 2000s is the result of the central bank’s policies less concerned with stimulating the economy than with its own turf battles, its ideological agenda to change Japan’s economic structure and goals of powerful interest groups. This eye-opening book raised – then in 2003, five years before the financial crisis – the important questions about the concentration of power within central banks…
An engaging and instructive documentary Princes of the Yen (by Michael Oswald, 2014) is based on Werner’s book and it is really worth-watching. Making extensive use of archival materials and recent beautiful footage of Japan, interviews and TV appearances of Richard Werner, the viewer is guided to an understanding of Japanese political economy in a very accessible manner and shown how economic events that may appear disjointed in popular discourse are in reality intimately intertwined.