Shirakawa Says Reforms Needed as Loose Monetary Policy Has Costs

Bank of Japan Governor Masaaki Shirakawa said there are limits to what monetary policy can achieve and governments must implement “necessary” reforms to aid the global economy.

“Providing liquidity as ‘a lender of last resort’ is, in essence, a policy to ‘buy time,’” Shirakawa said in a speech late yesterday at the London School of Economics. “It is essential that the necessary structural reforms take place while time is being bought, as the time that we can buy becomes progressively more expensive.”