Yasushi Mieno, the former governor of the Bank of Japan has passed on. The former governor is always remembered for the role he played in the introduction of the lost decade of stagnation. He also caused a lot of distress in the country’s landed property and stock market bubble. He died at 88.
Yasushi Mieno, former governor of the Bank of Japan, governor of the Bank of Japan, Bank of Japan, Japanese Economy
Central Bank’s statement released today shows that Mieno succumbed to a heart failure while in hospital on 15th April.
He became the BOJ’s Governor in 1989 the year when the bank was experiencing a boom caused by speculative venture in property and stocks. In one week, the Governor had increased interest rates something that caused the market a lot of distress. He also dismissed calls by investors and politicians to lower rates in order to redeem the economy from doldrums.
In December 1994, at a send-off party in Tokyo, Mieno said that he never regretted his moves since they were aimed at a long-term economic growth with little inflation.
Mieno also added that his move were not meant to spur the economy during recession but were mainly meant to deal with the effect of the bubble and trigger economic growth in the absence of inflation.
During his tenure of office, Central Bank increased the essential rate to 6% from 3.75% in one year. The benchmark now stands at 0-0.1%
During his five year term, a lot of stock firms have recorded a fall in their stock average with some falling by over 48%. It is also notable that it took the Governor a long time to halt the bubble that was being experienced in property prices.
Hideo Kumano, an economist, points out that it was because of the increase in interest rates and reduced lending of banks to real estates that the bubble became unbearable. He adds that the rates had gone up so quickly and businesses could not afford to borrow.
But the current Governor for the BOJ, Masaaki Shirakawa noted that Mieno introduced a calm decision-making to his managerial policy. He also said that the former governor had strong feelings of bereavement.
Mieno who originates from Oita Prefecture joined the BOJ in 1947 immediately after graduating from the law school in Japan. He has since worked in the BOJ until he retired.
Shirakawa noted that Mieno became the governor at a time when the economy was experiencing a lot of hardships. He added that the former governor was faced with the bubble problem and a severe recession. During that time there were large amounts of ineffective loans that remained a great threat to the financial system.
It was in 1993 that Mieno warned the country that the economy could not be launched by a simple monetary policy. He also noted that he was facing different kinds of pressure with some politicians vowing to sack him if he didn’t lower rates.
Shirakawa is also facing the same pressure from legislatures who want the bank to enhance growth and notes that the current financial tools can do very little to achieve this.