Bank Of Japan Names Seiichi Shimizu AKA Mr.Ycc As Director of Monetary Policy

Seiichi Shimizu, whose market and technical expertise on the Bank of Japan's yield curve control (YCC) policy earned him the moniker "Mr. YCC," was appointed as an executive director in charge of monetary policy on Monday.

Shimizu's appointment comes as the central bank seeks a smooth exit from its bond yield control policy, which has been chastised for distorting bond market pricing and crushing commercial banks' margins.

Shimizu, who is already one of the BOJ's six executive directors, takes over monetary policy from Shinichi Uchida, who was appointed deputy governor on Monday.

The 57-year-old career central banker oversaw major changes in market operations during his tenure as head of the financial market department.

As head of the elite monetary affairs department, he helped compiled a package of steps to mitigate the side-effects of YCC in 2021 such as phasing out its huge buying of risky assets.

"As YCC nears its limit, it's ideal to have someone like Shimizu take on the role of containing the side-effects of the policy," said Mari Iwashita, chief market economist at Daiwa Securities.

Shimizu also negotiated with overseas counterparts on steps to calm investors when the COVID-19 pandemic jolted marktes in 2020 - a skill likely to come in handy as fears of a global banking sector crisis unsettle markets.

"The BOJ will probably have to scrutinise how much the crisis could spread," said Izuru Kato, chief economist at Totan Research. "If it sees the chance of a contagion as limited, the central bank could move towards tweaking YCC."

The executive directors, who report to the nine-member board, are in charge of overseeing the central bank's day-to-day operations, which include monetary policy, financial market affairs, and international liaison.

On Monday, Uchida and former banking regulator head Ryozo Himino were formally appointed as the BOJ's deputy governors, succeeding Masayoshi Amamiya and Masazumi Wakatabe.

When incumbent Haruhiko Kuroda's term ends next month, incoming governor Kazuo Ueda will join the BOJ.

Many analysts expect the BOJ to modify or eliminate YCC during Ueda's five-year tenure, as the bank's massive bond buying to defend its yield cap has been criticised for distorting the yield curve's shape and draining bond market liquidity.