Bank of Japan Gov. Masaaki Shirakawa is under fire for refusing to consider 1930s-style purchases of government bonds to fund reconstruction from the nation's largest earthquake on record.
Shirakawa repeatedly attempted to quash direct buying of government debt, a step allowed in extraordinary circumstances with the permission of the Diet, in appearances before lawmakers this week. The policy would undermine confidence in the yen and provoke a surge in consumer prices, he said at Diet fiscal and finance committee hearings.
"If this isn't a special situation, what is?" Kozo Yamamoto, a Diet member with the Liberal Democratic Party, said in an interview this week. Yamamoto advocated a ¥20 trillion reconstruction program funded by BOJ debt purchases. A group of ruling party lawmakers submitted a similar proposal to Finance Minister Yoshihiko Noda on March 18, according to a Web log posting by Democratic Party of Japan member Yoichi Kaneko.