Bank of Japan facts for kids

Quick facts for kids
Bank of Japan
日本銀行

Headquarters in Chūō, Tokyo
Headquarters	Chūō, Tokyo, Japan
Coordinates	35°41′10″N 139°46′17″E / 35.6861°N 139.7715°E / 35.6861; 139.7715
Established	27 June/10 October 1882
Ownership	At least 55% of all capital must be owned by the Government of Japan
Governor	Kazuo Ueda (9 April 2023 – present)
Central bank of	Japan
Currency	Yen JPY (ISO 4217)
Reserves	US$1.12 trillion (October 2023)
Bank rate	+0.50%

The Bank of Japan (日本銀行, Nippon Ginkō, BOJ) is Japan's central bank. Think of it as the "bank for banks" in Japan. Its main job is to keep Japan's money system stable. People often call it Nichigin (日銀) for short. Its main office is in Nihonbashi, Chūō, Tokyo.

The BOJ works independently from the Japanese government. This independence helps it make decisions about money that are best for the country in the long run. It focuses on keeping prices stable and the economy healthy.

History of the Bank of Japan

How the Bank Started

The Bank of Japan was created after the Meiji Restoration. Before this, different parts of Japan used their own money. In 1871, the yen became Japan's new official money. At first, many private banks could print money. But soon, the Bank of Japan became the only one allowed to do this.

Building the Bank

Matsukata Masayoshi, a finance minister, suggested creating the Bank of Japan in 1882. It officially opened on October 10, 1882. The idea for the bank came from the National Bank of Belgium. The Bank of Japan is partly owned by private investors, but the government owns most of it.

In 1885, the Bank of Japan printed its first banknotes. Japan joined the gold standard in 1897. This meant that the value of the yen was linked to gold. By 1899, the old banknotes from other banks were no longer used.

The Osaka branch of the Bank of Japan is seen in the top right of this 1930 aerial photograph. The wide street in front of the bank is part of the Mido-Suji.

In the early 1900s, the Bank of Japan worked closely with the government. Its leader was seen as a very important person in Japan's business world.

World War II and Beyond

The Bank of Japan was reorganized in 1942 during World War II. After the war, its operations were briefly paused. It was restructured again in 1949.

In the 1970s, Japan's economy changed a lot. It became more open to the world. The Bank of Japan also changed how it managed money. For many years, the BOJ used a method called 'window guidance'. This meant it set limits on how much commercial banks could lend. This method played a role in the "bubble economy" of the 1980s.

In 1997, a new law gave the Bank of Japan more independence. This meant it could make decisions without as much government influence. The law said the bank should work closely with the government, but still be independent.

Economic Ups and Downs

In 1971, the "Nixon shock" happened. This caused inflation in Japan. The BOJ tried to control it by raising interest rates. In 1979, during an energy crisis, the BOJ quickly raised interest rates again. This helped Japan's economy recover fast.

In 1985, the Plaza Accord made the Japanese yen much stronger against the US dollar. To prevent the economy from slowing down, the BOJ lowered interest rates. This, along with other policies, led to a "bubble" in real estate and investments.

After 1990, the bubble burst, and stock and property markets fell. The BOJ worked to fix this. In 1995, after the Great Hanshin earthquake, the yen became very strong. The BOJ lowered interest rates to 0.5% to help. This period marked the start of deflation (when prices generally fall).

In 1999, the BOJ started a zero-interest-rate policy (ZIRP). This meant borrowing money was very cheap. They ended it briefly but restarted a similar policy in 2001. During the 2008 financial crisis, the BOJ lowered interest rates again and bought government bonds to support the economy.

In 2013, the BOJ started a new program called quantitative easing (QE). This involved buying many different types of assets, including stocks. In 2016, they introduced yield curve control (YCC) and a negative interest rate policy (NIRP). This meant banks had to pay to keep money at the BOJ. In 2024, the BOJ ended its negative interest rate policy.

Fighting Deflation

After Shinzō Abe became Prime Minister in 2012, the Bank of Japan took strong steps to fight deflation. Deflation means prices keep falling, which can hurt the economy. The BOJ aimed to double Japan's money supply in two years by buying lots of securities and bonds. However, by 2016, it was clear that more work was needed to achieve stable prices.

How the Bank Works

Main Goals

The Bank of Japan has two main goals:

• Price Stability: This means keeping prices from rising or falling too much. The BOJ aims for a 2% inflation target. Inflation is when prices go up over time. Japan has struggled with deflation (falling prices) for a long time.
• Financial System Stability: This means making sure the system for handling money (like banks and payments) works smoothly. People need to trust the system.

The BOJ's policies are decided at Monetary Policy Meetings (MPM). These meetings happen every other month.

What the Bank Does

The Bank of Japan has several important jobs:

• Issuing Banknotes: It is the only organization in Japan that can print and manage Japanese yen banknotes.
• Setting Monetary Policy: It adjusts the amount of money in circulation to keep prices stable. It does this by changing interest rates and other financial tools.
• Bank for Banks: It helps financial institutions make transactions. Banks have accounts with the BOJ, but regular people and businesses do not.
• Government's Bank: It handles money for the Japanese government, like collecting and paying out public funds.
• Lender of Last Resort: If a bank is in trouble, the BOJ can lend it money to prevent a financial crisis. This helps keep the financial system stable.
• International Relations: It works with other central banks around the world and helps manage Japan's foreign exchange.
• Research and Statistics: It collects information about the economy and publishes economic reports.

Money the Bank Holds

The Bank of Japan owns a large amount of Japanese public stocks. Since 2020, it has owned more domestic stocks than any other organization in Japan.

Headquarters

Bank of Japan Headquarters
日本銀行本店
General information
Architectural style	Neoclassical
Town or city	Chuo, Tokyo
Country	Japan
Coordinates	35°41′12.6″N 139°46′17.1″E / 35.686833°N 139.771417°E / 35.686833; 139.771417
Completed	1896; 129 years ago (1896)
Owner	Bank of Japan
Technical details
Floor count	10
Design and construction
Architect	Tatsuno Kingo

The Bank of Japan Headquarters (日本銀行本店, Nippon Ginkō Honten) is the main office of the BOJ. It is located in Nihonbashi, Chuo, Tokyo, Japan. The building is considered an important architectural site in Tokyo. It stands on the spot where a gold mint used to be. It is also near the famous Ginza district, which means "silver mint."

The main building was designed by Tatsuno Kingo in 1896. He was inspired by the Bank of England and the National Bank of Belgium's buildings. The building is in a style called neo-baroque. It became an Important Cultural Property in 1974. The new building, completed in 1973, has 10 floors above ground and 5 underground. The south annex building houses the Currency Museum of the Bank of Japan.

Branches

• 

  The Bank of Japan Osaka Branch

• 

  The Bank of Japan Otaru Museum in Otaru, Hokkaido

Leadership

Governor of the Bank of Japan
Incumbent Kazuo Ueda since 9 April 2023
Style	His Excellency
Appointer	The Prime Minister
Term length	Five years
Inaugural holder	Yoshihara Shigetoshi
Formation	6 October 1882

The governor of the Bank of Japan (総裁, sōsai) is a very important person. They have a lot of influence on Japan's economic policies.

List of Governors

Monetary Policy Board Members

As of April 9, 2023, nine people make up the board that sets the Bank of Japan's money policies:

• Kazuo Ueda, the Governor of the BOJ
• Uchida Shinichi, Deputy Governor
• Himino Ryozo, Deputy Governor
• Adachi Seiji
• Nakamura Toyoaki
• Noguchi Asahi
• Nakagawa Junko
• Takata Hajime
• Tamura Naoki

See also

In Spanish: Banco de Japón para niños

• Japanese yen
• Economy of Japan
• National Printing Bureau
• Japan Mint
• List of central banks