Japan occupies a singular position in global finance: it is one of the world’s most advanced economies and the one that has most extensively challenged the limits of conventional monetary and fiscal policy. Decades of experience in deploying novel monetary policy tools and acceptance of large public sector deficits have produced a macro financial policy landscape with few analogs. Japan’s financial governance institutions now face a uniquely demanding task – completing one of the most consequential monetary policy transitions in modern history and maintaining fiscal sustainability while simultaneously harnessing the financial system as a catalyst for the country’s economic priorities.
This policy brief was jointly prepared by Julia Bingler, Senior Fellow at the Council on Economic Policies; Aziz Durrani, Team Lead & Senior Technical Assistant Specialist at AMRO; and Matthew Poggi, Economist affiliated with the Council on Economic Policies.