Legally, the BOJ Governor participates in decision-making as 1 of the 9 votes on the Policy Board, but in practice oversees the organization as its chair and influences the agenda for the 8 annual Monetary Policy Meetings as well as the Bank's explanations to the markets. This article explains the Governor's role in practice.
The Governor of the Bank of Japan plays an important role affecting the Japanese economy, but legally is part of a framework in which monetary policy is decided by a majority vote of the 9-member Policy Board. The Governor has only 1 vote, equal to that of any other member, so the Governor's absolute power is limited.
Even so, the Governor oversees the Bank of Japan as a whole and, as chair of the Policy Board, leads discussions on policy direction. The Governor also consolidates the analyses and data prepared by the various departments and incorporates them into the final decision. In practice, the Governor's influence is greater than the legal position alone would suggest.
Because financial markets move in anticipation of policy meetings, the yen exchange rate, long-term interest rates and stock prices can react sensitively to the nuances of the Governor's remarks and explanations. The Governor's choice of words can also have a market-wide effect in mobilizing funds.
The Bank of Japan's organizational structure consists of a 9-member Policy Board, comprising 1 Governor, 2 Deputy Governors and 6 Policy Board members. Although the Governor is at the center of the Board, the Governor is legally not treated as “1 person” and is positioned as a key office capable of influencing the organization's overall policy decisions.