Banking Frontiers - - Country Report -

Ja­pan’s cen­tral bank, the Bank of Ja­pan, was es­tab­lished in 1882 to con­trol the money supply and to be the lender of last re­sort to the bank­ing sys­tem. The gov­ern­ment owns 55% of the cen­tral bank and the pri­vate in­vestors own the rest. It is the sole bank that is­sues the yen; it is man­dated to en­force the gov­ern­ment’s eco­nomic and fi­nan­cial poli­cies. Un­til the late 1990s, it came un­der the in­di­rect con­trol of the min­istry of fi­nance, but the gov­ern­ment passed laws to make it an autonomous in­sti­tu­tion. An­other en­act­ment was the set­ting up of the Fi­nan­cial Ser­vices Agency, which is re­spon­si­ble for the au­dit­ing and su­per­vi­sory op­er­a­tions ear­lier per­formed by the fi­nance min­istry.

The cen­tral bank, be­sides han­dling the re­spon­si­bil­ity of is­su­ing ban­knotes and coins also over­sees the for­mu­la­tion and im­ple­men­ta­tion of the mon­e­tary pol­icy of the coun­try to en­sure price sta­bil­ity, un­der­take nec­es­sary ac­tions in or­der to main­tain fi­nan­cial sys­tem sta­bil­ity and con­trol the yen carry trade.

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