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Shimizu appointed as executive director on monetary policy
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Shimizu armed with market, technical expertise on YCC
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Experience with COVID-induced market rout may come in
handy
(Adds details on Shimizu's career)
By Takahiko Wada and Leika Kihara
TOKYO, March 20 (Reuters) - The Bank of Japan on Monday
appointed Seiichi Shimizu, whose market and technical expertise
on the bank's yield curve control (YCC) policy earned him the
name "Mr. YCC", as an executive director in charge of monetary
policy.
The appointment of Shimizu comes at a time the central bank
seeks a smooth exit from the bond yield control policy, which is
drawing criticism for distorting bond market pricing and
crushing commercial banks' margin.
Shimizu, who is already among the BOJ's six executive
directors, takes over the task of overseeing monetary policy
from Shinichi Uchida, who became deputy governor on Monday.
During his stint as head of the financial market department,
the 57-year-old career central banker oversaw big changes in
market operations made when the bank adopted YCC In 2016.
As head of the elite monetary affairs department, he helped
compiled a package of steps to mitigate the side-effects of YCC
in 2021 such as phasing out its huge buying of risky assets.
"As YCC nears its limit, it's ideal to have someone like
Shimizu take on the role of containing the side-effects of the
policy," said Mari Iwashita, chief market economist at Daiwa
Securities.
Shimizu also negotiated with overseas counterparts on steps
to calm investors when the COVID-19 pandemic jolted marktes in
2020 - a skill likely to come in handy as fears of a global
banking sector crisis unsettle markets.
"The BOJ will probably have to scrutinise how much the
crisis could spread," said Izuru Kato, chief economist at Totan
Research. "If it sees the chance of a contagion as limited, the
central bank could move towards tweaking YCC."
The executive directors, which report to the nine-member
board, divide up the task of overseeing the central bank's
various day-to-day operations including monetary policy,
financial market affairs and international liaison.
Uchida and former banking regulator head Ryozo Himino
formally assumed the BOJ's deputy governor posts on Monday,
succeeding Masayoshi Amamiya and Masazumi Wakatabe.
Incoming governor Kazuo Ueda will join the BOJ when
incumbent Haruhiko Kuroda's term ends next month.
Many analysts expect the BOJ to tweak or end YCC during
Ueda's five-year rein, as the bank's huge bond buying to defend
its yield cap faces criticism for distorting the shape of the
yield curve and draining bond market liquidity.
(Reporting by Takahiko Wada and Leika Kihara; Editing by Sam
Holmes)
