Shirakawa Masaaki (白川 方明) discussed his views on confidence in a currency and referred to the need to examine the costs of yen weakness and monetary easing. He said confidence is determined by fiscal sustainability and monetary policy stability, and that public understanding and central bank independence also have an impact.
Shirakawa Masaaki (白川 方明) explained that confidence in a currency is supported by trust in fiscal sustainability and the importance of monetary policy aimed at maintaining currency stability. He expressed the view that confidence is not created solely by the government or central bank, but is something the public itself instills in a currency.
Price stability and the safety of deposits were cited as ways to measure confidence domestically. Although they are not usually a focus of attention, the decline in confidence in the yen during a financial crisis was given as an example. During periods of tension such as war, the yen tends to be bought as a safe haven, which is said to indicate its relatively high level of confidence.
The view was also expressed that confidence in the yen has weakened compared with the past. The degree of social support for fiscal sustainability and central bank independence was described as an important factor determining confidence in the yen.
Regarding the yen’s historical weakness, domestic developments among companies were mentioned as a primary factor, but the article is paywalled and ends at the stage of suggesting this point.