By Chikako Mogi

Bank of Japan Wins Greater Autonomy

Tokyo - Japan's Parliament approved a law that gives the Bank of Japan greater independence from the government, though analysts say it will be up to the central bank to turn itself into a truly autonomous body.

Bank of Japan Gov. Yasuo Matsushita hailed the new law and pledged to pursue internal reforms in order to fulfil public expectations for a more independent central bank.

"The BoJ law is revised to fulfil our longstanding wish: to strengthen our independence and accountability," Mr. Matsushita said. The new law is the "greatest event" in the central bank's 115-year history, he said. It is the first change in the Bank of Japan law in over half a century; it becomes effective April 1.

The law gives the Bank of Japan more independence from the government on policy matters and provides a legal framework for other aspects of operations, such as inspections of commercial banks, which have been conducted until now through bilateral contracts with each bank.

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Some analysts express concern that too much attention is being paid to the issue of central bank independence, and not enough to accountability.

"Given that much independence on policy-making, a checking function should become a more important issue than independence," says Richard Werner, chief economist at Jardine Fleming. The measures included in the new law may not be enough, he says.