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Financial Stabilization in Meiji JapanThe Impact of the Matsukata Reform$
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Steven J. Ericson

Print publication date: 2020

Print ISBN-13: 9781501746918

Published to Cornell Scholarship Online: May 2020

DOI: 10.7591/cornell/9781501746918.001.0001

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Founding a Central bank

Founding a Central bank

(p.88) 5 Founding a Central bank
Financial Stabilization in Meiji Japan

Steven J. Ericson

Cornell University Press

This chapter shows how, like other aspects of the Matsukata financial reform that veered from classical financial orthodoxy, the Bank of Japan (BoJ) turned out to be hardly orthodox in its structure or operations. The BoJ, established in October 1882, was pivotal to Matsukata's effort to stabilize and modernize public finance. It separated currency management from the state's fiscal machine but keeping it under tight government supervision. Instead of choosing the Bank of England model with its high degree of independence from the government, Matsukata drew on the model of the Belgian central bank because it involved greater state control. Once established, the BoJ moved in an even more statist direction, assuming the task of financing industrial firms and adopting flexible German-style note issue under close government supervision rather than the orthodox Bank of England approach.

Keywords:   central bank, Bank of Japan, Belgian central bank, public finance, currency management, government supervision, industrial firms, Matsukata reform

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