However, the new operating procedure provides the flexibility to move toward a more aggressive monetization strategy, should it opt to move in this direction, without having to change its operating strategy. Monetary policymakers in Japan have appeared to be reluctant, to pursue a bolder monetization strategy for several reasons. First, it might alter the incentives for fiscal policy, encouraging a delay in fiscal consolidation.
This highlights a fundamental policy problem in Japan – tensions between the rest of government, principally the Ministry of Finance, and the independent central bank. The result is a noncooperative solution that may preclude important opportunities for improved policy. Second, a policy of aggressive monetization might have its principal stimulative effects through depreciation of the yen.