The historical evolution of monetary policy (Goals and instruments) in Japan: From the central bank of an emerging economy to the central bank of a mature economy

This chapter reviews monetary policy developments in Japan from the late nineteenth century to the early twenty-first century, focusing on its goals and instruments. The goals of monetary policy have been defined based on the goals of the nation as a whole. They have changed over time in accordance with changes in the goals of the nation. On the long road to an industrialized, developed country from the late nineteenth century through the 1970s, the ultimate goal of monetary policy was to provide money for development while maintaining financial and price stability. Once Japan had achieved industrialization and become a leading economic power, the primary goal shifted from development to stability. Instruments of monetary policy have also changed over time while being constrained by the availability of such instruments in the financial markets, even though the central bank kept pursuing policy innovations.