Haruhiko Kuroda completed his 10-year term as governor of the Bank of Japan in April 2023.
After graduating from the University of Tokyo, Kuroda joined the Ministry of Finance in 1967. While he was studying in the U.K., his letters to The Economist magazine attracted the attention of renowned economist Roy Harrod.
While working in international finance and taxation, Kuroda faced the "Nixon Shock," the oil crisis and the bursting of Japan's "bubble economy." After serving as vice minister of finance for international affairs, and later as the president of the Asian Development Bank, he was approached by then-Prime Minister Shinzo Abe in 2013 to become governor of the Bank of Japan, which he accepted as his calling to help end deflation. His bold monetary easing lifted the sense of stagnation that had weighed on the country.
This English translation is the first of a 29-part series and the latest installment of Nikkei's "My Personal History" ("Watashi no Rirekisho"). The Japanese series was published in November.
I think it was Feb. 21, 2013. I clearly remember my surprise at the phone call that an aide had put through to the president's office at Asian Development Bank (ADB) in Manila.
"I would like to nominate you to succeed Masaaki Shirakawa as governor of the Bank of Japan (BOJ)," said a voice on the other end of the line. The voice was that of Prime Minister Shinzo Abe.
As president of the ADB, I had only briefed Abe a few times about the Asian economy. Rumors that I was a candidate to head Japan's central bank had reached Manila, but I was only a little over a year into my third term as ADB president.
Although I was momentarily at a loss, I accepted the nomination.
The Japanese economy had been mired in deflation for 15 years, starting in 1998. This deflation became more severe with the "Lehman Shock" and the Global Financial Crisis of September 2008, as well as the yen's appreciation to 75 yen per dollar after the March 2011 Great East Japan Earthquake. It was bound to be difficult, but someone had to overcome deflation. This appointment was my calling, I thought.
I left for Tokyo in a rush. I told the Diet committees that I would do my utmost to end deflation, and I was then approved as the 31st governor of the Bank of Japan. At my first monetary policy meeting in April 2013, the BOJ's policy board unanimously decided to introduce significant "quantitative and qualitative monetary easing" to achieve "at the earliest possible time" the 2% inflation target it had set.
During my 10 years as governor, I aimed to overcome the entrenched idea that prices and wages would not rise -- thinking that had developed during the deflationary period -- and to bring Japan out of deflation. The country was also hit by tumultuous developments, including COVID-19 and Russia's invasion of Ukraine.
In the midst of these difficulties, I was always thinking about what was the best response for Japan and what was in the national interest.
Through the major monetary easing implemented by my colleagues at the BOJ, and the collective efforts of the central bank, we created an economy that was "not in deflation." Corporate earnings doubled and more than 4 million new jobs were created. The 2% inflation target was still a ways off, but I believe that the target will be reached in a sustainable and stable manner this year.
In 1967, I joined Japan's Ministry of Finance, where I served for 35 years, including two years as head of the international finance bureau and three and a half years as vice-minister of finance for international affairs. I have served a total of 56 years in the public sector, both domestically and internationally, including eight years as president of the ADB, which supports the development of Asian economies, and 10 years as BOJ governor, a position from which I retired last April.
The Nixon Shock of 1971 (that is, the U.S. decision to abandon the gold-dollar standard), the oil crises of 1973 and 1979, and the Plaza Accord of 1985 -- I was on the ground when international foreign exchange policy and international coordination mechanisms were being transformed. I watched with concern as Japan's asset bubble grew, despite the economic recovery, due to the hugely expansive fiscal and monetary policies that came in response to the unstoppable appreciation of the yen.
In the 1990s, the Japanese and overseas economies experienced many trials and tribulations, namely the bursting of Japan's bubble economy, banking crisis, the Asian Financial Crisis and thereafter the Global Financial Crisis. Given the difficulty of finding solutions, I thought hard about how to reconcile Japan's national interests with those of the world.
I have held many face-to-face negotiations with the world's top international financial authorities, including Larry Summers and Timothy Geithner, both of whom served as U.S. treasury secretary. Sometimes things went well and sometimes they did not.
My intellectual starting point was "The Poverty of Historicism," by the Austrian philosopher Karl Popper. I was absorbed with this work in high school. When demonstrations against the revision of the Japan-U.S. Security Treaty swept Japan, I questioned the arguments of the Marxists who led the movement. I was drawn to Popper's fundamental critique of that ideology. I am deeply sympathetic to the idea that history should not be blindly accepted as theory.
Japan will continue to face many challenges. Born at the end of the Second World War, I thought about writing about my over half century experience in the policy field for the benefit of the younger generations. I hope that you will listen to my story for a while.
Haruhiko Kuroda is a former governor of the Bank of Japan.
Click here to read Haruhiko Kuroda's "My personal history" series.
