Close cooperation between monetary and fiscal authorities can be observed not only in Japan, but also in other areas where unconventional monetary policy has been deployed.5 For instance, when the Bank of England introduced its Asset Purchase Facility, a letter from the Chancellor made it clear that the British government would provide an indemnity to cover any losses arising from the Facility.
However, this close cooperation does not necessarily imply the loss of central bank independence for the following two reasons. First, a clear mandate of inflation targeting guarantees active monetary policy down the road. The zero lower bound on the nominal interest rate ties the hands of central bankers when it comes to deflation.