Bank of Japan Governor Masaaki Shirakawa said Thursday the central bank is committed to ensuring the stability of the country’s financial system in the event the eurozone debt crisis deepens.
In his speech in Tokyo, Shirakawa also warned of the negative impact that a strong yen may have on the Japanese economy and prices, pointing out that global economic prospects face “significant uncertainty” and adding the BOJ will closely monitor whether the situation leads to acceleration of Japanese firms shifting operations overseas.
While a firm yen can work positively for domestic demand-related sectors such as retail sales and imports of energy, its “negative effect is dominant,” as “the stronger yen causes a decline in exports and corporate profits as well as deterioration in business sentiment,” he said.
Shirakawa said the central bank, which employs monetary easing policy to support the economy, continues to conduct monetary policy appropriately.
“At present, the Bank of Japan pays utmost attention to maintaining the stability of the financial markets and the financial system even if nervousness regarding the European debt problem increases,” Shirakawa said.