JAPAN: Shinzo Abe readies meetings with Cameron and Merkel as his Central Bank could be the first to adopt ‘helicopter money’ policy but not in true sense of the word as an economist has told CNBC – @AceFinanceNews

#AceFinanceNews – June.30: This central bank could be the first to adopt ‘helicopter money’ policy

The Bank of Japan (BOJ) is the central bank most likely to adopt “helicopter money” policy but not in its traditional sense, an economist told CNBC.

CNBC

As Shinzo Abe is arranging  to speak separately with David Cameron and Angela Merkel, foreign ministry says Reuters reported today.

There is growing concern outside Japan over whether the Bank of Japan will adopt so-called helicopter money as part of its monetary easing policy, since the bank’s current easing policy is seen as bearing little fruit.

Helicopter money is thought to stimulate demand by distributing money as if cash were falling from a helicopter.

However, the concept has many critics because it allows a government to deploy fiscal stimulus without taking into consideration how to repay the fiscal funds.

During a press conference Thursday, Bank of Japan Gov. Haruhiko Kuroda denied the use of helicopter money: “There is an institutionally established system in which the government and the Diet are responsible for carrying out fiscal policy, while monetary policy is conducted by an independent central bank. Under the current legal system, I don’t think we can carry out [helicopter money].”

Financial law prohibits the BOJ’s direct purchase of national bonds from the government. Yet the law also stipulates that the BOJ is allowed to buy the bonds under special circumstances and within limits set by a vote in the Diet.

Helicopter Money Policy

Helicopter money as a policy option | VOX, CEPR’s Policy Portal

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