Tuesday, March 5, 2013
Ex-ECB Chief Trichet Frowns On Activist Monetary Policy
TOKYO (Nikkei)--The former chief of Europe's central bank delivered a veiled criticism of aggressive monetary easing here Monday, prompting the nation's top financial diplomat to come to the defense of Bank of Japan policy.
Speaking at a symposium organized by the Institute for International Monetary Affairs, Jean-Claude Trichet warned of a tendency among developed countries toward so-called beggar-thy-neighbor policies. He stressed the need for policymakers to look beyond their own borders to the global economy.
Trichet, president of the European Central Bank from 2003 to 2011, is a firm believer that monetary policy works best when carried out by the book and free of political interference.
The Japanese vice minister of finance for international affairs, Takehiko Nakao, denied that the BOJ is trying to beggar anyone and insisted that its goal is "breaking out of the vicious cycle of deflation in Japan."
The yen's recent depreciation reflects economic stability in the U.S. and Europe, along with Japanese trade deficits, Nakao argued, stressing that the currency markets determine exchange rates.
(The Nikkei, March 5 morning edition)