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Asia-PacificDecember 23 2010

The Bank of Japan must wake up and act

The Japanese central bank must use its unique position within the country's political system to eradicate entrenched thinking and kick-start its stagnant economy. Writer Charles Smith
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The Bank of Japan must wake up and act Masaaki Shirekawa, governor, Bank of Japan

Japan lost the dubious distinction of being the world's most predictable democracy in late 2009 when the pro-business Liberal Democratic Party (LDP), Jiminto, lost a lower-house election, after an almost uninterrupted 50 years in power, to the mildly left-wing Democratic Party of Japan (Minshuto).

It is no surprise after such an upset that the Minshuto has attempted some housecleaning. Despite already going through a change of prime ministers and suffering a painful defeat in the upper house of parliament in July 2010, the new ruling party has tried to orchestrate a mass transfer of decision-making power from central government bureaucrats, who made most key decisions under the LDP, to its own MPs.

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