For the next few weeks, Tokyo’s financial circles will be buzzing with intrigue over who will replace Haruhiko Kuroda as Governor of the Bank of Japan.
Kuroda’s 10-year term ends on April 8th. Prime Minister Fumio Kishida is expected to announce Kuroda’s successor in February. Markets anticipate it will be one of his two stand-ins, Masayoshi Amamiya or Masazumi Wakatabe.
But Kishida would do well to surprise the world by naming a woman instead.
The decade that Kuroda controlled Japan’s monetary policy was a lost decade for the female half of Japan’s 126 million people. And in exchange for eliminating the gender inequalities that are undermining Asia’s second largest economy.
It’s not Kuroda’s fault. But the past 10 years have been a cautionary tale of missed opportunities from the ruling Liberal Democratic Party, which hired him in 2013.
All available research from the International Monetary Fund to Goldman Sachs shows that nations that make the best use of women are the most dynamic, innovative and productive. Not empowering women is the economic equivalent of tying a link behind your back.
That own-goal dynamic finally dawned on Tokyo a decade ago. Prime Minister Shinzo Abe spoke early and often of a “womenomics” push to enable the other half of the population to thrive and improve Japan’s economic game.
In 2014, Abe said that “up to now, companies have been driven by men’s ideas. But half of consumers are women. The introduction of women’s ideas would lead to new innovations. If we realize a society where women shine, we can create a Japan full of vitality.”
Abes LDP has set a national goal of having 30% women in leadership positions in public and private institutions by 2020. Unfortunately, politics itself turned out to be a brilliant object.
There was no mechanism to achieve the goal. No real incentives or penalties. CEOs and patriarchy in general stuck to business as usual. By 2016, the targets were downgraded to 7% for higher government positions and 15% for corporations. Then they were largely forgotten.
What must not be forgotten is how precipitously Japan’s gender rankings have fallen over the past decade. When Tokyo launched the “Womenomics” PR campaign in 2012, it was ranked 101st on the World Economic Forum’s Gender Gap Index. By 2022, Japan had slipped to 116th place, behind Burkina Faso, Tajikistan and Guatemala.
Japan is now 14 rungs behind China, not exactly a place to impress women’s empowerment organizations. And 17 places behind South Korea, where Yoon Suk-yeol won the presidency in 2022 on an “anti-feminist” platform.
Tokyo fares even worse for women in politics, ranking 139th out of 146 countries. That puts it behind Bahrain, Jordan and Saudi Arabia. Investors also get excited about how few Nikkei 225 companies have ever had a female CEO or chair.
Even the alleged gender achievements of the LDP require an asterisk. Sure, the labor force participation rate of women is increasing. But up to two-thirds of those jobs are “non-regular,” offering lower pay, fewer benefits, and negligible job security.
What better way to turn the tide than by appointing the first female BOJ leader? The BOJ has never had a female deputy governor. Breaking the all-male application cycle at BOJ headquarters could bring new perspectives to an institution fast losing confidence in global markets.
Look no further than this week’s lack of action from the BOJ. After the BOJ adjusted its bond yield policy on Dec. 20, traders braced themselves for 29 days of bold tapering. The markets were virtually ready for Kuroda’s team to begin completing a decade of epic asset purchases. The BOJ disagreed.
The thing is, if a globally respected politician like Kuroda, who enjoys considerable gravity in Tokyo political circles, lacked the courage to change course, even modestly, are we to believe his successor? In reality, 24 years of zero interest rates – and the last 10 years of even more aggressive quantitative easing – have essentially trapped the BOJ.
The “groupthink” that has long reigned at the BOJ seems even more ingrained. This means the institution seriously fears being blamed for the stock and bond market collapse or crater growth. Chances are things will remain on autopilot with Tokyo leaving the BOJ center cast with a “safe” Kuroda replacement.
Working with a female governor could add new food for thought to the mix. And there are actually good candidates. Take Tokiko Shimizu, who in May 2020 became the first female executive director at a place established in 1882. Her appointment to oversee the international affairs of the BOJ at the decidedly male-dominated institution marks an important advance.
Think tank boss Yuri Okina leads the shortlist of potential candidates. So has former BOJ board member Sayuri Shirai, who has long proposed a review of policies that allow officials to adjust interest rates more flexibly.
Along with fresh leadership energy, the appointment of a female BOJ leader would put Kishida’s party back on the offensive when it comes to diversifying leadership ranks. And why stop there?
Role models are important. Lead by example. Currently, Kishida’s cabinet includes only two women, and they are in less prominent roles. This is emblematic of the tokenism that governs the LDP. During the late Abe’s 2012-2020 tenure — and his earlier 2006-2007 tenure — he appointed a few women here and there, but always gave top posts to men.
Neither Kishida, Abe, nor reformist Prime Minister Junichiro Koizumi from 2001-2006 appointed a woman as head of foreign affairs or finance, or chief secretary of the cabinet. And, with all due respect, how can anyone say that Kishida’s chief financial officer, Shunichi Suzuki, excelled at his job? Why not name a female replacement there as well?
The top BoJ job is an ideal moment for Kishida to remind the world that his struggling government has a pulse – and a clue on how to regain economic momentum.