BOJ appoints Seiichi Shimizu as executive director

TOKYO The Bank of Japan has appointed Seiichi Shimizu as an executive director of monetary policy, whose market and technical expertise on the bank's yield curve control YCC policy earned him the name of Mr. YCC.

The central bank's bond yield control policy has been criticised for distorting bond market pricing and crushing commercial banks' margin, and the appointment of Shimizu comes at a time when the central bank is seeking a smooth exit from the bond yield control policy.

Shimizu, who is already one of the six executive directors of the BOJ, takes over the task of overseeing monetary policy from Shinichi Uchida, who became deputy governor on Monday.

During his stint as the head of the financial market department, the 57-year-old career central banker oversaw big changes in market operations when the bank adopted YCC In 2016.

As a head of the elite monetary affairs department, he helped compile 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 over 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 that is likely to come in handy as fears of a global banking sector crisis has wreaked havoc on markets.

Izuru Kato, chief economist at Totan Research, said the BOJ would have to look at how much the crisis could spread. If it sees the chance of a contagion as limited, the central bank could move towards tweaking YCC. The executive directors, who report to the nine-member board, oversee the central bank's various day-to- day operations, including monetary policy, financial market affairs and international liaison.

On Monday, Uchida and the former banking regulator Ryozo Himino took over the BOJ's deputy governorships, replacing Masayoshi Amamiya and Masazumi Wakatabe.

When incumbent Haruhiko Kuroda's term ends next month, Kazuo Ueda will join the BOJ.

Many analysts expect the BOJ to change or end YCC during Ueda's five-year reign, 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.