Japan

The Bank of Japan serves as the nation's central bank and sovereign monetary authority. Governed by the Policy Board and headed by Governor Kazuo Ueda, the bank is a unique corporation established under the Bank of Japan Act, with 55% of its shares owned by the Japanese government. It functions as the sole supplier of national currency, the principal maker of national monetary policy, and as a lender of last resort for the nation’s commercial banking sector. As opposed to being the counterparty of public consumers, the bank deals directly with banks, securities corporations, insurance companies, and international central banks.

The Bank of Japan controls the flow of money within the country and maintains stability in the financial system using four main functions. Firstly, it sets monetary policy on monetary issues by determining the rate of interest and buying or selling financial assets to ensure price stability, currently targeting a 1.25% interest rate to maintain an inflation rate of 2%. Secondly, it is the only institution responsible for issuing banknotes within the country, regulating the production, printing, and circulation of the Japanese yen. Thirdly, the institution performs the function of being the “bank of banks,” ensuring efficient clearance and settlement services for commercial financial institutions while acting as the lender of last resort in case of financial crisis. Lastly, it performs treasury functions internationally under the Ministry of Finance, in charge of foreign exchange reserves amounting to billions of dollars.