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14th CF40-NRI Finance Roundtable: Yen Exchange Rate and Japanese Bond Market under Divergent Monetary Policies

The value of the yen, a safe-haven currency, has dropped drastically to almost a 20-year low, placing pressure on the Japanese government bond market. What led to the yen's nose dive? How can the Bank of Japan reconcile currency volatility and yield curve control? How will the yen's fall affect the global and Japanese financial markets? What kind of policy should Chinese decision-makers adopt in the face of many difficulties?

On July 14, 2022, CF40 and Nomura Research Institute (NRI) convened a panel of experts to answer these pressing questions. This event featured the findings of Bank of Japan’s research on ‘Different Dimension of Monetary Easing’ presented by Katō Izuru, director and chief economist at the Totan Research Co., Ltd., followed by remarks on the status quo of the Chinese economy by CF40 guest researcher Xu Qiyuan. Katō Izuru first gave an introduction to the background of Abenomics and Japan's ultra-loose monetary policy, as well as a data-based analysis of the economic effects and side effects. Xu Qiyuan summarized China’s economic performance in two pieces of good news and two bad – that the Chinese economy is recovering from lockdowns and there is much room for its fiscal and monetary policy, but data show that the recovery is weak, slow, and threatened by the expanding CNY-USD spread and inflation.

Katō Izuru also responded to questions on yen depreciation and different sentiments of Japan’s fiscal and monetary authorities on the cheaper yen, Japan’s debt burden, and populating aging. Xu Qiyuan then addressed the questions on China's central bank lending, recovery measures, and infrastructure investment.

CF40 Member Miao Yanliang moderated the event. NRI senior fellow Tetsuya Inoue gave the introductory and closing remarks.