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.
Abe’s three main economic policies, dubbed “Abenomics” by the global press, are known at home as the “three arrows” approach – a reference to the sixteenth-century daimyo (feudal lord) Mori Motonari, who had three sons. One day, Motonari asked each of them to snap an arrow, which they did without difficulty. But when he then asked them to snap three arrows, none could do it. Having demonstrated that what is fragile on its own can be robust in a bundle, Motonari urged his sons to remain united.