TOKYO — In the late 1990s, in the thick of the Asian financial crisis, a top Japanese Finance Ministry official turned to his protégé and found him engrossed not in policy documents, but in a chunky volume of the works of Aristotle.
That bookish aide, Haruhiko Kuroda, is set to be approved Friday to become the next Bank of Japan governor, one of the most thankless jobs in a country plagued for decades with economic problems. He will need more than Aristotelian logic to turn years of the central bank’s policies on their head.
The Japanese prime minister, Shinzo Abe, who took office in December, has pointed his finger at the central bank and its seemingly hapless monetary decision-making as the root cause of the country’s economic woes. The bank must take a far tougher stance against deflation, Mr. Abe has demanded, to stem the sluggish profits, spending and investment that have weighed on the Japanese economy since the 1990s.
Mr. Kuroda, 68, is tasked with bringing about a regime change at the bank, something he himself, a critic of the bank, has previously called for. His track record of disparaging the central bank for not doing more to fight deflation as well as a career that has spanned the stodgy halls of Japanese bureaucracy and the negotiation tables of global finance convinced Mr. Abe that he was the man for the job, officials say.
“Speed is of the utmost importance,” Mr. Kuroda told a parliamentary hearing earlier this week. “I intend to pursue bold monetary easing, both in scale and in quality.”
It will be a tough job, though one that offers a chance to right the Bank of Japan’s blemished history of missteps and blunders in attempting to right one of the world’s major economies.
The Bank of Japan’s woes reach back to the mid-1980s, when it lowered interest rates to prop up an economy reeling from a rapidly strengthening yen. And despite signs that the easy money was helping to fuel a spectacular bubble economy, the bank kept interest rates low, finally tightening policy in 1989. By that time, stock and land prices had more than quadrupled from five years earlier.