The Asian Wall Street Journal, Thursday, June 12 1997
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.
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.