The role of monetary policy When I took office as Governor of the Bank of Japan about two months ago, I read again Professor Milton Friedman's well-known presidential address, "The Role of Monetary Policy," given at the American Economic Association Annual Meeting in 1968, recalling my days as a student of Friedman's last class at the University of Chicago.
In the address, he put the role of monetary policy this way. The first and most important lesson that history teaches about what monetary policy can do – and it is a lesson of the most profound importance – is that monetary policy can prevent money itself from being a major source of economic disturbance...