• Kyodo News


Masaru Hayami, who as governor of the Bank of Japan employed unprecedented zero-interest-rate policies and brought quantitative monetary easing to the fore to address financial crises, died Saturday, his family said Sunday. He was 84.

Hayami served as the 28th BOJ chief between March 1998 and March 2003 during a time when the economy was jolted by the collapse of a number of financial institutions brought down by bad loans.

His family did not disclose the cause of death.

Hayami was the first central bank chief to serve under the new Bank of Japan Law, which came into force in 1998 and gave the BOJ more independence from the government.

As the financial crisis deepened following the nationalization of such major banks as the Long-Term Credit Bank of Japan, now Shinsei Bank, and Nippon Credit Bank, now Aozora Bank, Hayami adopted a policy in February 1999 of guiding key interest rates to near zero.

Judging that uneasiness over the financial system had receded, he put an end to the zero-interest-rate policy in August 2000, although the government remained cautious about lifting the 18-month-old, ultra-easy monetary policy.

As the economy worsened due to the downfall of the information technology bubble, Hayami introduced quantitative monetary easing in March 2001, providing financial markets with ample liquidity.

Under the new policy, the BOJ targeted the balance of current accounts held by financial institutions at the central bank, instead of the conventional policy of targeting interest-rate levels.

Under Hayami’s leadership, the BOJ implemented purchases of shares held by banks, also an unprecedented step for a central bank.

Hayami, known as an advocate of a strong yen, sometimes came under criticism by those who believe a strong yen is detrimental to Japan’s export-dependent economy. But he stressed the need for Japan to promote structural economic reform.

Hayami, who hailed from Kobe, joined the BOJ in 1947. After holding such posts as chief of the BOJ’s Nagoya branch, he moved to Nissho Iwai Corp., predecessor of Sojitz Corp., in 1981 and became president in 1984.

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