The Pope of Japanese Finance
TOKYO – While the world focuses on the gathering of cardinals in Rome to choose a successor to Pope Benedict XVI, a similar conclave is underway in Tokyo to choose the Bank of Japan’s (BOJ) next governor. And, as with the deliberations at the Vatican, politics, not doctrinal debate, is underpinning the decision-making process in Japan.
Last December, the president of the Liberal Democratic Party, Shinzo Abe, won back control of the government for the LDP after more than three years in opposition, securing the post of Prime Minister for the second time. In his election campaign, and since coming to power, Abe has advocated a radical revitalization of the Japanese economy that would end two decades of deflation and growing political and strategic uncertainty.
In anticipation of an LDP-led government (with the New Komeito Party as a junior coalition partner), financial markets began to move toward a weaker yen. Japan’s stock market reacted favorably as well, rising almost 30% since the vote.