Ex-BOJ chief Hayami, practitioner of zero-rate-policy, dies at 84

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TOKYO, May 17 Kyodo -
Former Bank of Japan Governor Masaru Hayami, who instated unprecedented
zero-interest-rate and quantitative monetary easing policies to fight Japan's
financial crisis, died Saturday, his family said Sunday. He was 84.
Hayami served as 28th BOJ chief between March 1998 and March 2003 during a time
when the Japanese economy was jolted by the collapse of a number of financial
institutions brought down by bad loans, as well as deflation.
His family did not disclose the cause of death.
Hayami succeeded Yasuo Matsushita, who resigned from the top post of the BOJ
over a bribery scandal involving a senior official at the central bank.
He was the first Japanese central bank chief under the new Bank of Japan Law,
which came into force in April 1998 with the BOJ's strengthened independence
from the government.
As the financial crisis deepened following the nationalization of such major
banks as the Long-Term Credit Bank of Japan, now Shinsei Bank, and Nippon
Credit Bank, now Aozora Bank, Hayami adopted a policy of guiding key interest
rates to near zero in February 1999.
Judging that uneasiness over the financial system had receded, he put an end to
the zero-interest-rate policy in August 2000 although the government remained
cautious about lifting the 18-month-old, ultra-easy monetary policy.
As the Japanese economy worsened due to the bursting of the so-called
information technology bubble, in March 2001 Hayami introduced the quantitative
monetary easing policy of providing financial markets with ample liquidity.
Under the new policy, the BOJ targeted the balance of current accounts held by
financial institutions at the central bank, instead of the conventional policy
of targeting interest-rate levels.
Under Hayami's leadership, the BOJ implemented purchases of shares held by
banks, also an unprecedented step for a central bank.
Hayami, known as an advocate of a strong yen, sometimes came under criticism as
many in business circles think that a strong yen is detrimental to Japan's
export-dependent economy. But he stressed the need for Japan to promote reform
of the economic structure.
Hayami, who hailed from Kobe, Hyogo Prefecture, joined the BOJ in 1947 after
graduating from the Tokyo College of Commerce, the predecessor of Hitotsubashi
University.
After assuming such posts as chief of the BOJ's Nagoya branch, he moved to
trading house Nissho Iwai Corp., the predecessor of Sojitz Corp., in 1981 and
became its president in 1984.
Hayami served as chairman of the Japan Association of Corporate Executives,
known as Keizai Doyukai, for four years from April 1991.
==Kyodo
2009-05-17 20:55:33