In the coming weeks, financial circles in Tokyo will be buzzing with anticipation about who is replacing Haruhiko Kuroda as governor of the Bank of Japan.
Kuroda’s 10-year run ends on April 8. Prime Minister Fumio Kishida is expected to announce Kuroda’s successor in February. The markets believe it will be one of his two deputies, Masayoshi Amamiya or Masazumi Wakatabe.
But Kishida would be wise to surprise the world by naming a woman instead.
The decade in which Kuroda ruled Japan’s monetary policy is a lost decade for the female half of Japan’s 126 million people. And, subsequently, to address the gender inequality that undermines the No. 1 economy. 2 Asia to solve.
It’s not Kuroda’s fault. But the past 10 years have been a cautionary tale of missed opportunities by the Liberal Democratic Party that hired him in 2013.
All the research available from the International Monetary Fund to Goldman Sachs shows that the nations that make the best use of women’s labor are the most vibrant, innovative and productive. Not empowering women is like tying an arm behind your back.
This self-targeting dynamic ended in Tokyo ten years ago. At the time, Prime Minister Shinzo Abe spoke early and often about pushing for “womenomics” to enable the other half of the population to thrive and raise Japan’s economic game.
In 2014, Abe said that “so far corporations have been driven by the ideas of men. But half of the consumers are women. Bringing in ideas by women would lead to new innovation. When we realize a society where women shine, we can create a Japan that is full of vitality.”
Abe’s Development Plan set out a national goal of having 30% of senior positions in both public and private institutions filled by women by 2020. Sadly, the policy itself was a flop.
There was no mechanism to achieve the goal. No real incentives or penalties. CEOs, and the patriarchy in general, went about business as usual. By 2016, the targets were downgraded to 7% for senior government jobs and 15% for companies. Then, they were largely forgotten.
What cannot be overlooked is how steeply Japan’s gender ranking has fallen over the past decade. In 2012, when Tokyo launched the womenomics PR campaign, it ranked 101st on the World Economic Forum’s gender gap index. By 2022, Japan had fallen to 116th place behind Burkina Faso, Tajikistan and Guatemala.
Japan is now 14 steps behind China, not exactly a place that affects women’s empowerment organizations. And 17 points behind South Korea, where Yoon Suk-yeol won the presidency in 2022 on an “anti-feminist” platform.
Tokyo fares even worse when it comes to women in politics, ranking 139th out of 146 countries. This puts it behind Bahrain, Jordan and Saudi Arabia. Investors cannot be satisfied either with the small number of companies whose CEO or chairman was a Nikkei 225 company.
Even the LDP’s alleged gender success requires an asterisk. Certainly, the labor force participation rate of women is rising. But as many as two-thirds of those jobs are “irregular” jobs, which offer less pay, fewer benefits and negligible job security.
What better way to turn the tide than to name the first female head of the BOJ? The BOJ has never had a female deputy governor. Breaking the all-male application cycle at BOJ headquarters could inject fresh perspectives into an institution that was rapidly losing confidence in global markets.
Don’t expect BOJ inaction this week. For 29 days after the BOJ changed its bond yield policy on December 20, traders were preparing for a bold “tapering” move. The markets were, in fact, ready for Kuroda’s team to begin ending a decade of epic asset purchases. The BOJ collapsed.
The thing is, if a world-respected policymaker like Kuroda, who carries a lot of weight in Tokyo’s political circles, didn’t have the courage to change course, even modestly, are we to believe the will of his successor? In reality, the BOJ is essentially stuck with 24 years of zero interest rates – and the last 10 years of even more aggressive quantitative easing.
The “groupthink” that has long prevailed at the BOJ appears to have been even more fundamental. It means that the institution is very afraid of being blamed for crashing stock and bond markets or hurting growth. Things seem to remain on autopilot if Tokyo goes with Kuroda’s replacement “safely” from the BOJ’s central solution.
Going with a female governor may bring fresh thinking into the mix. And indeed there are good candidates. Take Tokiko Shimizu, who in May 2020 became the first female executive director at a place founded in 1882. Her appointment to oversee the BOJ’s international affairs at the male-dominated institution was a major step forward. on her.
The head of the think tank, Yuri Okina, tops the shortlist of potential female candidates. Former BOJ board member Sayuri Shirai has long advocated a review of policies that allow officials to adjust interest rates more flexibly.
Along with the leadership’s new energy, naming a female BOJ chief would put Kishida’s party back on track when it comes to diversifying its leadership ranks. And why stop there?
Role play is important. So leadership leads by example. Currently, there are only two women in Kishida’s cabinet, and in less prominent roles. This is a sign of the LDP’s leading signaling. During the late Abe’s 2012-2020 premiership – and his previous one in 2006-2007 – he appointed a few women here and there, but always giving top jobs to men.
Neither Kishida nor Abe nor reformer 2001-2006 Prime Minister Junichiro Koizumi named a woman to head foreign affairs or finance or to act as chief cabinet secretary. And, with all due respect, how can anyone say that Kishida’s chief financial officer, Shunichi Suzuki, excels at his job? Why didn’t you name a replacement there too?
The top BOJ job is a perfect moment for Kishida to remind the world that his flailing government has a pulse — and a clue on how to regain economic momentum.