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Academic interest in this issue and its applicability to the Bank of Japan has also risen lately. See Jeanne and Svensson (2004).
The Bank of Japan has also engaged in aggressive foreign exchange intervention to limit yen appreciation both as a fiscal agent for the Ministry of Finance and for its own account.
See Cargill, Hutchison, and Ito (2001, p. 84).
Ueda (2000), however, has argued that had the Bank of Japan been more independent in the second half of the 1980s, it would have resisted foreign exchange operations to limit yen appreciation and thus not accommodated the run-up in asset prices. This is debatable and ignores that fact that the Bank and Ministry of Finance both supported foreign exchange intervention to limit yen appreciation.
In addition to Japan and the United States, the central banks of Austria, Belgium, Greece, Italy, the Netherlands, Pakistan, South Africa, and Switzerland still have private shareholders (Lybek and Morris, 2004).
The yen at the time was equivalent to approximately 1.5 grams of gold.
Remarkably, Japan took only seven years to realize that the national banking system was a failure, while the United States took almost half a century to replace the national banking system with a central bank-issued currency. For an interesting account of the Japanese experience with banknotes during that period see Boling (1996).
Other items net, the residual from all identified assets and all identified liabilities, was examined in light of the fact that not all central banks report capital as a separate IFS line item and that national accounting conventions could lead to hidden losses or reserves being classified as OIN.
And, as noted above, this could accomplish this through regulatory changes determined by the Bank of Japan and the Ministry of Finance.
Sellon (2003) discusses the comparative financial conditions facing the two central banks in the 1930s and 1990s.
The decision of the Federal Reserve to raise reserve requirements in 1936-37 also illustrates a serious policy error traceable to an accounting measure approach to calculating excess reserves of the banking system. The Federal Reserve viewed the accumulation of excess reserves as weakening its financial strength—ability to control the money supply—and doubled reserve requirements. This action is generally regarded as a major contributing factor to the sharp recession in 1938. See Cargill and Mayer (2005).