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QuestionWhat does it mean that the Bank ensures transparency?
The Bank is granted independence in the conduct of monetary policy in order to ensure neutrality and provide the requisite expertise. On the other hand, since the Bank's monetary policy has a large influence on people's lives and Japan's economic and financial developments, the Bank has a responsibility to explain its decision and the basis of the decision to the public in a comprehensive manner. Based on this understanding, Article 3, paragraph 2 of the Bank of Japan Act (hereafter the Act) stipulates that the Bank shall endeavor to clarify to the citizen the content of its decisions, as well as its decision-making process, regarding currency and monetary control.
At the same time, ensuring transparency in the Bank's monetary policy conduct and gaining a broad understanding about the Bank's policy intentions will lead to enhanced effectiveness of monetary policy.
Ensuring Transparency under the Act
In order to meet the accountability requirements, the Bank conducts the following, based on laws and regulations:
(1) Publication of the minutes of the Monetary Policy Meetings (MPMs)
After each MPM -- during which monetary policy is decided -- the Bank is required to promptly publish the summary of opinions and the minutes. It is also required to release the transcript of each MPM after ten years have passed (available only in Japanese). Through such publications, the Bank reveals to the public and market participants what was discussed during each MPM and the process of the discussion (Article 20 of the Act and other related rules).
(2) Reports to and attendance at the Diet
Pursuant to the Act, the Bank submits the Semiannual Report on Currency and Monetary Control to the Diet approximately every six months and endeavors to explain it to the Diet. The Governor of the Bank or a representative assigned by the Governor is required to attend the Diet in case the Bank is requested to explain its operations and financial situations (Article 54 of the Act).
(3) Publication of Gyoumu Gaikyo Sho (Outline of Business Operations)
The Bank publishes Gyoumu Gaikyo Sho (Outline of Business Operations, available only in Japanese) once a year along with its financial statements and the statement of accounts (Article 55 of the Act). The Bank also releases in English an Annual Review that includes excerpts from the Gyoumu Gaikyo Sho.
Additional Information regarding Monetary Policy Conduct
In addition to the above, the Bank decides the text of the Outlook for Economic Activity and Prices (Outlook Report) at the MPMs and releases it quarterly (usually in January, April, July, and October). The Outlook Report presents the current situation of and the Bank's outlook for developments in economic activity and prices, assesses upside and downside risks, and outlines its views on the future course of monetary policy. The Governor of the Bank holds a press conference as Chairman of the Policy Board after each MPM, in order to explain the details of the decision and the thinking behind the decisions. Also, the Bank releases the Summary of Opinions approximately six business days after the MPM. Each Policy Board member, including the Governor and the Deputy Governors, delivers speeches on various occasions to explain the Bank's thinking on its conduct of monetary policy.