Vox Populi, Vox Dei is a daily column that runs on Page 1 of The Asahi Shimbun.
July 19, 2021 at 15:52 JST
The Bank of Japan headquarters in Tokyo’s Chuo Ward (Asahi Shimbun file photo)
Seiji Noma (1878-1938), the founder of the major Japanese publishing company Kodansha Ltd., was not much of an expert in finance.
When his wife, who had just retired from teaching, asked him what she should do with her retirement allowance, Noma said she should put the money into a good, trustworthy bank and recommended the Bank of Japan--the central bank.
Noma said to her, “You can trust that bank,” so his wife went to the BOJ to deposit her money. But the bank, unsurprisingly, declined her request, according to his autobiography.
Central banks do not offer asset management services for individuals. But is it within their mandate to provide financial support to efforts to combat climate change?
The BOJ recently announced a new program to indirectly support businesses committed to reducing their carbon footprints. Under the program, the central bank will offer zero-interest loans to financial institutions that invest in or lend money to such companies. But the BOJ’s mission is supposed to be ensuring the stability of prices and the financial system.
The BOJ argues the case for the initiative by saying “climate change will have huge medium- and long-term effects on the economy, prices and the financial situation.”
But this logic can be applied to a wide range of questionable policy measures. The BOJ could, for example, announce a plan to provide support to matchmaking parties, saying low birth rates will have a major impact on the economy. But it would be ridiculed.
Some may still contend that a strong case can be made for a central bank’s policy efforts to help curb harmful climate change. But what if a central bank provides a lot of money to finance the building of nuclear power plants to fight global warming?
Policy decisions on such contentious issues should be made by a government elected by the voting public.
The BOJ’s new climate initiative has been partly inspired by similar anti-carbon emissions moves by some other major central banks, including the European Central Bank, which has decided to place a greater importance on climate change in its core policy decisions.
Since the 2008 collapse of the U.S. investment bank Lehman Brothers triggered a global financial crisis, many central banks have opened the monetary spigots wide under radically unconventional programs to inject liquidity into financial systems.
But these measures have still been within the scope of their missions.
--The Asahi Shimbun, July 18
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Vox Populi, Vox Dei is a popular daily column that takes up a wide range of topics, including culture, arts and social trends and developments. Written by veteran Asahi Shimbun writers, the column provides useful perspectives on and insights into contemporary Japan and its culture.
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