Interview With Former Governor of Bank of Japan, SHIRAKAWA Masaaki

On Tuesday, October 27, 2015, SHIRAKAWA Masaaki, the former Governor of Bank of Japan (BOJ), visited APU and delivered a lecture on “Global Control of Money in the Age of Globalization”. Three of our Student Press Assistants (SPA) got to speak to him about his journey from an assignment in Oita to being the governor of BOJ and the current university professor.

1. How come you chanced upon the world of economics?

I would say it was combination of my broad aspiration for working in public policy area and a mere accident. Talking about the former, I was fascinated by economics throughout my university student life. It was with this fascination that I decided to expose myself to the field of economics professionally. But places that satisfy my fascination were rather limited: scholar, government and central bank. Soon I found myself having gotten an opportunity for an interview at BOJ. The person whom I first met at that institution was so admirable that it made me realize that an organization which has such workforce has to be exceptional, and it was due to this episode that I decided to work for BOJ.

2. Can you shed some light on your journey from the Oita branch of BOJ to being the governor of BOJ?

I was a manager of Oita branch of BOJ from May 1994 till December 1995, before being assigned the post of the chief representative at New York’s office. I was expected to stay for 2-3 years in New York, but because of my family’s illness, I decided to go back to Tokyo earlier than expected. After that, I was assigned to assist the deputy governor of BOJ with his chairmanship of a committee at Bank for International Settlements. As I was never engaged in international finance before, this experience truly opened my eyes and made me feel that this field is really exciting. I left BOJ in 2006 but to my surprise, in 2008, I was appointed as the Governor of BOJ. Now that I am looking back on my professional life, if I hadn’t got back Tokyo earlier than I expected because of my family’s illness, I wouldn’t have been involved in assignments of international finance which turned out to be quite important for the governor position. In retrospect, every role I had assumed came by accidents in this sense. Therefore, I often call myself “the Accidental governor” (laugh). Life is full of accidents.

3. You are currently teaching at Aoyama Gakuin University. How is the shift from being the Governor of BOJ to being a university professor?

I am currently teaching two courses in Aoyama Gakuin University while often going to foreign countries to deliver speeches at international conferences organized by central bank or university. As I’m no longer working for a central bank, I am now spending more time on thinking about broad policy issues for central bank from long-run perspective rather than short-run issues. When I left BOJ, I was 63 years old- an age that is no longer young, but not too old. I pondered what kind of life I wanted to spend from then onwards. Then vague thought has emerged: I want to convey my experiences to the future generation. By “future generation”, I mean the university students I’m teaching at home and abroad, young staff at central banks and governments and academics who are interested in central bank policy among others.
This new position in life gives me a sense of satisfaction.

4. Do you find it challenging to balance the teaching position and delivering public speeches?

I don’t accept offers I don’t feel excited about. Once or twice a month I would fly abroad to deliver speeches or lectures. Sometimes I travel with my wife and after I fulfilled my job of delivering speeches or lectures, we would visit interesting places together, for example, in May after the lecture in London, we visited Lake Districts. Such combination of life and work is quite enjoyable, as it keeps me attentive on the current issues while relaxing at the same time.

5. The decisions that you make influence the world. How do you feel about that?

Undoubtedly, central Banks do make a lot of important decisions. During my tenure there, I was responsible for a lot of such decisions. However, people sometimes mistakenly view central bank as an almighty institution in a democratic society, which is incorrect. Central bank is existing in the society. It's an institution that needs reasonable support from the general public. It does make a lot of decisions that affect the society. This means that central bank has to be trusted by the general public. The trust needed is the credibility that “even though central bank sometimes makes unpleasant decision, this institution is fulfilling its responsibility for long-run stability”. Given the current globalization trend, the actions taken by central bank of big country surely affects other part of the world, yet what’s more important is the collective effects of their decisions. Central banks have the mandate of achieving stability in their own country, yet every decision made influences the world. How to internalize, so to speak, “spillover effect” is quite difficult but at least candid exchange of views among central banks is prerequisite for achieving global optimal.

6. Based on current trends and experiences, what sort of knowledge do you think students should equip themselves with for the future?

This is another difficult question! (Laughs!)
I would say two things. First is “Knowing how to know”. Gaining knowledge is important, but what's more important is knowing how to know! It's essential to identify problems and to know how to approach it. Second is curiosity. The more knowledge people gain, the more humble they become. I believe this is essential because it is this humility that makes people strive to know more and leads to better decisions. For instance, after Japanese economic bubble burst, we were criticized a lot by foreign academics and policy makers. Still, what advanced economies are now experiencing are more or less the same as what Japan experienced. This shows how difficult it is to have empathy and look at the issues as its own problem and hence “knowing how to know” and curiosity is so important to figure out solutions to big issues.

7. Practical advice to APU students

“Don’t spend too much time on smartphone.”
Herbert A. Simon who was awarded a Nobel Memorial Prize in Economic Sciences in 1978 had a remark about the future of computerization:” a wealth of information creates a poverty of attention.” Undoubtedly advancement of IT gives us tons of useful information, but it is important to remember that digesting those information consumes our precious time. We should spend more time on thinking of long-run issues rather than paying too much attention to the short-run ones. That is my practical advice for APU students.

Regarding himself as a former “Accidental Governor”, SHIRAKAWA left a strong impression on SPAs for his immense knowledge and humble remarks. SPAs wish him all the best on his new chapter of nurturing future generation as shared, and are looking forward to welcoming him at APU again.

Related Link: Former Bank of Japan Governor SHIRAKAWA Masaaki Gives Lecture at APU (APU Official Website)

Student Press Assistant (SPA)
NGHIEM Quoc Hoai Minh (Vietnam)
ARORA Akshat (India)