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Former Bank of Japan governor to discuss monetary policy at UCSD roundtable

Bank of Japan’s former governor will discuss monetary policy in the wake of a global financial crisis at UC San Diego’s economics roundtable lecture series Thursday.

Masaaki Shirakawa also spoke at an event on Feb. 20 hosted by the Center on Emerging and Pacific Economics, based at UC San Diego’s School of International Relations and Pacific Studies.

Shirakawa is a career central banker. He joined the Bank of Japan in 1972 and was its governor from 2008 through 2013 -- a time when there were six prime ministers. IR/PS professor Ulrike Schaede, who introduced Shirakawa at the Feb. 20 event, said he became the face of Japanese government and served as a “steady rock in a turbulent ocean.”

People looked to him for guidance, Schaede said, and while there were no easy solutions, not one big Japanese bank went bankrupt due to the global mortgage crisis and financial crisis after.

At the Feb. 20 event, Shirakawa discussed coordination among the different central banks and how the effects of monetary policy can spill over into other countries.

When Japan was discussing quantitative easing in the early 2000s, Shirakawa said, he didn’t understand why neighboring countries were concerned.

Now that the U.S. is beginning to taper, Shirakawa said, he understands the effects that can have on neighboring countries.

Japan’s short-term interest rate is already zero; therefore, it cannot change the interest rate gap between the U.S. and Japan. The interest rate is determined by the Federal Reserve’s monetary policy, Shirakawa said. When it lowers the interest rate, the gap is narrowed, leading to depreciation. When the U.S. economy recovers and begins tapering, the interest rate gap may increase.

Shirakawa plans to address the topic of Japan’s declining population at the Feb. 27 economic roundtable. He said it is one of the biggest challenges the Japanese face, and they need to make a strong effort to increase the population even though it takes many years to be effective.

When comparing the growth rate of industrial countries since 2000, Japan’s growth rate of GDP is low, Shirakawa said. Per capita, the growth rate is average.

Looking at the growth rate of GDP of the working population, Japan is the highest. He said this is “encouraging and discouraging” because the proportion of people working is shrinking, and Japan needs to boost its participation rate.

The economics roundtable will run from 7:30 to 9 a.m. on Thursday at the UC San Diego Faculty Club.

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