Abstract

Currency is all about trust. In this rapidly changing economic and social environment, what is necessary to "inscribe trust on currency"? It can be said that the process of "inscribed trust on currency" reflects the "overall strength" of a country and its society. This book explains the efforts of central banks and other stakeholders necessary to enhance such "overall strength," based on theory, history, and practice, and offers 10 recommendations.

[Table of Contents]
Introduction What if you were a policymaker at the central bank?
Chapter 1: Currency and the Financial System
Chapter 2: The Role of the Central Bank
Chapter 3: Objectives of Monetary Policy
Chapter 4: Target Inflation Rate
Chapter 5: Transmission Mechanisms of Monetary Policy
Chapter 6: Theory of Inflation Rate Determination
Chapter 7: Monetary Policy and Medium- to Long-Term Economic Growth Rate
Chapter 8: Effective Lower Interest Rate Constraint and the Theory of Substitution
Chapter 9: Effects of Unconventional Monetary Policy
Chapter 10: Costs of Unconventional Monetary Policy
Chapter 11: Monetary Policy and Fiscal Policy
Chapter 12: The Importance of Fiscal Sustainability
Chapter 13: Exchange Rate Fluctuations
Chapter 14: Financial Regulation and Supervision
Chapter 15: Lender of Last Resort
Chapter 16: The Implementation Process of Monetary Policy
Chapter 17: Principles of Monetary Policy Management
Chapter 18: Ideological Basis of Central Bank Independence
Chapter 19: Institutional Design and Operation of Central Bank Independence
Chapter 20: Accountability, Transparency, and Communication
Chapter 21: The Central Bank as an Organization
Chapter 22: The International Monetary System
Chapter 23: Interest-Billing System for Central Bank Current Accounts
Chapter 24: Central Bank Insolvency
Chapter 25: Digital Currency
Chapter 26: Expected Future Environmental Changes
Final Chapter: "The Mark of Credit"—Recommendations for Improvement

Author’s Information

Special Visiting Professor at Aoyama Gakuin University.

Born in 1949. Graduated from the Faculty of Economics, University of Tokyo in 1972 and joined the Bank of Japan in the same year. From 1975 to 1977, he studied at the University of Chicago Graduate School of Economics while at the Bank of Japan. He holds a Master of Economics degree from the University of Chicago. After serving as Director of the Credit Systems Division of the Credit Systems Department, Director of the Planning Division of the Planning Department, Branch Manager of the Oita Branch, and Senior Advisor in the Planning Department, he served as a Director of the Bank of Japan from 2002 to 2006. After retiring as a Director, he became a professor at the Graduate School of Public Policy, Kyoto University. In March 2008, he became Deputy Governor of the Bank of Japan, and from April 2008 to March 2013, he served as the 30th Governor of the Bank of Japan. From 2011 to 2013, he served as Vice Chairman of the Board of Directors of the Bank for International Settlements (BIS). In September 2013, he became a specially appointed professor at the Faculty of International Politics and Economics, Aoyama Gakuin University, and has held his current position since September 2018.

His publications include "Bubbles and Monetary Policy: Japan's Experience and Lessons" (co-edited, Nikkei Business Publications, 2001), "Modern Monetary Policy: Theory and Practice" (Nikkei Business Publications, 2008), "Central Banks: 39 Years of Experience as a Central Banker" (winner of the Nikkei Economic Book and Culture Award and the Tetsuro Watsuji Cultural Award, Toyo Keizai Inc., 2018), and "Tumultuous Times: Central Banking in an Era of Crisis," Yale University Press, 2021.