Hayami, Masaru

▪ 2003

      By 2002 Masaru Hayami, the governor of the Bank of Japan (BOJ), had become so alarmed at his country's faltering economy and its sluggish pace of reform that in September he announced an unprecedented move. Japan's central bank would buy some $24 billion in stock holdings directly from more than a dozen of the country's largest commercial banks, bypassing the market to provide the ailing institutions with enough capital that they could dispose of trillions of yen in bad loans. Hayami's decision, according to one observer, was the equivalent of “[tossing] a hand grenade into the financial system.” Given the severity of the banking crisis, drastic measures were perhaps necessary. According to official figures, Japanese bank debt had soared by 29% in the previous fiscal year. Hayami's announcement ignited a brief rally on the Nikkei 225 stock index, though it remained to be seen what long-term effect the stock purchase might have.

      Hayami was born on March 24, 1925, in Kobe, Japan. After graduating from the Tokyo University of Commerce, he joined the BOJ in 1947. He remained with the central bank for the next 34 years. In 1967 Hayami was named manager of the bank's Ooita branch, and four years later he became the BOJ's chief representative in Europe. He was appointed director of the foreign department in 1975. After another stint as a branch manager—this time in Nagoya from 1976 to 1978—he was named an executive director, a position he held for three years.

      In 1981 Hayami left the BOJ to take a position as senior managing director at the trading firm Nissho Iwai Corp. He rose to become president of the corporation in 1984 and served as its chairman from 1987 to 1994. During his tenure at Nissho Iwai, he also headed the Japanese Institute of Corporate Executives, one of the country's most prominent business organizations. From 1992 until his appointment as BOJ governor in 1998, he served as chairman of the board of trustees at Tokyo Women's Christian University.

      As the new governor of the BOJ, Hayami was charged with restoring the institution's prestige; his predecessor, Yasuo Matsushita, had resigned over a bribery scandal. Along with his sterling credentials as a banker, Hayami brought to the job a market-oriented philosophy and a reformist agenda. In particular, he stressed the need for starting the process of corporate restructuring and helping banks rid themselves of their nonperforming loans. By 2002 it was obvious that he was losing patience with the slow pace of reform. “If you guys don't hurry up, my life will run out soon,” he reportedly told one group assigned to tackle the country's financial problems. Prime Minister Junichiro Koizumi, who had come into office promising banking reform, publicly expressed his approval of Hayami's stock-purchase plan, although some considered the plan too risky. Despite rumours that he would step down before his term as BOJ governor expired in March 2003, Hayami insisted that he would serve as long as his health allowed.

Sherman Hollar

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