Gang Style Monetary Policy

The Minister of Finance, Taro Aso, arrived at Moscow wearing a black hat on his head. Reported as a gang style minister, Aso must not be feeling bad, because it had not been the case that Japanese foreign minister get attention from foreign media in international conference. Even how a stylist minister become feeling good in the flash lights, the statement of Group 20 Financial Architecture Meeting in Moscow marked a corner of Japanese monetary policy manipulated by governmental incentives.

The statement urged every party not to be involved in competitive devaluations without directly mentioning any particular country. While analysts recognize it as an approval on current aggressive policy of Japan and foresee Japanese yen continues to get down, the statement also made clear that G20 would maintain its commitment in market-determined exchange rate systems. The government of Japan needs more than ever to be careful in its economic policy not to be criticized as monetary manipulation.

“I explained that what Abe administration had done was doing its best to get rid of deflation. We got a certain understanding,” told Aso after the meeting. But the understanding was mostly came from G7 countries and international organizations. Non-G7 countries such as Mexico and Brazil were skeptical about the intention of Japanese monetary policy. They observe current move of foreign exchange to have stemmed from some domestic factors of parties.

Every country agrees with avoiding currency war. “The most important conclusion was that the meeting was not wrapped by ‘currency war’ agitation created by media,” told the gang style minister. It is not fair for a leader of economic policy making to turn our eyes off the significance of the meeting. The message of the parties was that they would not allow any manipulation of foreign exchange rate, while all of them want Japanese economy to be stable. The selfish attitude of ignoring inconvenient opinion and keep on pursuing his own interest should be resembled gang style.

The behavior of Aso should be determined as infantile. He often pretends himself to be a cartoon hero. How he looks like is the most important for him. This time, he wanted to play his role as a boss of currency mafia, who negotiates on monetary policies in the background of leaders meeting. But his style has nothing to do with national interest of Japan, but his own interest of making his own legacy in his own heart.

We should remember that the substantial figure representing Japan at the meeting was leaving chairman of the Bank of Japan, Masaaki Shirakawa. “We need to carefully look at actual move, then to decently listen to various opinions, and to search for ideal shape,” told Shirakawa in the press conference after the G20 meeting. Japan needs to listen carefully to what others say.