Financial institutions are under constant pressure to reduce costs, improve operational efficiency, adapt to regulatory changes and grow their business. NRI believes that a combination financial knowledge and information technology are crucial to the industry’s growth and development. Through our lakyara reports, NRI identifies the various capital markets and IT issues impacting our clients and the future of their business.
*Organization names and job titles are current as of the publishing dates
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This article is the first in a four-part series on structural changes in Japanese's financial mindset and behavior based on analysis of data from NRI Questionnaire Surveys of 10,000 Consumers. It discusses the need for more financial services that reflect renewed recognition of the importance of interpersonal safety nets and meet new advisory needs that have arisen in response to last year's earthquake and medium-term structural changes in Japanese society.
The BOJ and Fed's monetary policy frameworks have converged as both central banks have adopted de facto inflation targets and committed to maintaining ultra-low interest rate policies. However, the Fed and BOJ had different motivations in adopting such a framework.
The former was motivated by criticism of its large-scale asset purchases; the latter, by pressure to adopt an inflation target to supply liquidity more aggressively. For markets and governments, differences in how the BOJ and Fed communicate regarding monetary policy have various implications in terms of policy effectiveness and risks.
In light of the importance of the Policy Board of the BOJ, it is natural in a democratic state that elected legislators play a role in the selection. There are devices to prevent their excessive influences, and enhanced policy dialogue will be more efficient for achieving the necessary coordination. In order to attract attention from the markets, whether the current framework of the Policy Board is adequate for active policy debate should be revisited. Central banks in developed economies may share the challenge of the design of decision making process when policy coordination with the government is all the more required.