In response to the 2008 global financial crisis, many of the world’s largest central banks initiated unconventional monetary policies such as quantitative easing when standard open market operations became ineffective. The Bank of Japan, the US Federal Reserve, the Bank of England and the European Community Bank were among those that aggressively increased their respective monetary bases to purchase specified financial assets from commercial banks and financial institutions in order to lower interest rates interest rates for specific debt securities and stimulate their economies. Japan, which has long suffered from years of debilitating deflationary cycles, has targeted and committed to open-ended purchases until a stable two percent rate of consumer price inflation is achieved. Several of Japan’s chief exporting rivals, in particular China, have publicly criticized the Bank of Japan for using its current monetary policy to intentionally devalue its currency and thereby benefit from an unfair trade practice. This criticism is unwarranted and Japan’s policy complies with international law.

The Legality of Japan’s Current Monetary Policy under International Law
  1. Introduction
  2. Japan’s Quantitative Easing
  3. International Response to Japan’s QE
  4. Legal Challenges under International Law
  5. Conclusion

• John Riley(Law at Sogang University School of Law, Seoul, Korea)