Internationalization of the yen

In December 1978, Japan's Ministry of Finance put forward the "internationalization of the yen, so that the yen and the West German mark together to play the international currency part of the complementary function" of the policy, in 1985, Japan's total trade amounted to as high as 305.2 billion U.S. dollars, the yen has been appreciating, the yen's share of the total amount of foreign exchange reserves also reached 8%. The proportion of the total foreign exchange reserves of all countries in the yen also reached 8%, under these favorable conditions, Japan's Foreign Exchange Review Board in 1985 published "on the internationalization of the yen," and a series of official documents or agreements to formally promote the internationalization of the yen to challenge the hegemony of the U.S. dollar.

In order to make the yen widely circulated, Japan's advantage of strong capital, began to include China and other Asian countries, a large number of loans to the yen, 1972-1982, Japan's direct investment in the ASEAN five countries totaled 10.166 billion U.S. dollars, 1960-1978, Japan to Southeast Asia to provide government development assistance totaled 3.5 billion U.S. dollars, Japan's government development assistance totaled 3.5 billion U.S. dollars. Government development assistance totaled 3.5 billion U.S. dollars, and in China, the Beijing Metro Line 1, Beijing Capital Airport, Wuhan Yangtze River Second Bridge and other projects in the construction of the use of yen loans, relying on these loans and assistance, the yen in Asian countries to achieve a certain degree of internationalization.

In 1990, in Japan's exports and imports, according to the yen settlement of the proportion of 37.5% and 14.5%, respectively, than in 1980 increased by 8.1 and 12.1 percentage points; in the world's foreign exchange reserves, the yen's proportion of 8.0%, although still much lower than the United States of America's 50.6%, is also lower than the deutsche mark's 16.8%, but exceeded the pound sterling 3.0% more than twice. in April 1989, the yen's share in world foreign exchange transactions was 13.5%, equal to the deutsche mark, second only to the United States' 45.0%, and higher than the pound's 7.5% and the Swiss franc's 5.0%. As the international status of the dollar declined during the rise of the yen, the world saw the beginning of a trend toward a "three-pole currency system" of the dollar, the yen, and the West German mark.

Failure:

1, making the yen continue to appreciate:

In October 1983, the dollar against the yen began its first encounter, the U.S. Treasury Secretary Donald Reagan wrote to Japan's Minister of the Ministry of Finance, Takeshita Toshi, pointed out that: "due to the undervaluation of the yen, as well as Japan's trade surplus with the United States continues to expand, in the United States, the formation of a strong wave of criticism and a strong wave of criticism of the United States and the United States. Because of the undervaluation of the yen and Japan's growing trade surplus with the U.S., a strong wave of criticism and protectionist pressure has developed in the U.S. If the U.S. government is expected to do its best to prevent actions that seek to drive Japanese products and services out of the U.S. market, it is necessary for Japan to take strong and bold steps in the liberalization of its financial markets and the internationalization of the yen." However, the Japanese side believed that the root cause of the problem of yen depreciation and dollar appreciation was not the "artificial operation" of the Japanese side, but the high interest rate policy of the U.S. In November 1983, Japanese Prime Minister Nakasone told visiting President Reagan that "the dollar has become very strong because of the unstable influence of the world economic situation, and the dollar has become very strong because of the unstable influence of the world economic situation, and the dollar has become very strong because of the unstable world economic situation. The impact and become very strong, I hope that the United States side to make more efforts to reduce interest rates", this polite language under the exchange, but also shows that Japan does not want to see the yen appreciation.

2, the signing of the plaza agreement:

1985 "plaza agreement" signed after 10 years, the yen's value rose by an average of more than 5% a year, is tantamount to give the international capital to invest in Japan's stock market and the housing market, a sure-fire insurance. Nearly five years after the "plaza agreement", the stock price of 30% per year, land prices increased by 15% per year, while Japan's nominal GDP increased by only about 5% per year during the same period. The bubble economy is farther and farther away from the real economy, although Japan's GNP per capita exceeded that of the U.S. at that time, but the high domestic housing prices made owning their own homes become unattainable by ordinary Japanese nationals. 1989, the Japanese government began to implement a tightening of the monetary policy, although the bubble economy is burst, but the stock prices and land prices fell by 50% in a short period of time, and the banks formed a large number of bad debts, and Japan's economy entered into a recession in the decade or so. The Japanese economy entered a decade-long recession.

In 1987, the G5 countries met again at the Louvre in France to review the impact of the abnormal devaluation of the US dollar on the international economic environment since the Plaza Accord, as well as the advantages and disadvantages of adjusting the exchange rate to reduce the US trade deficit, and the result was that the US export trade had not grown in the period, and the crux of the US economic problem was the huge domestic fiscal deficit. The crux of the U.S. economic problem lies in the huge domestic fiscal deficit. Therefore, the Louvre Agreement asked the U.S. to stop forcing the yen and the mark to appreciate, and to save the U.S. economy by lowering the government budget and other domestic economic policies. In other words, the Plaza Accord did not find the crux of the economic weakness of the United States at that time, and the appreciation of the yen and the mark did not help its economic weakness at all.

On the contrary, the Plaza Accord had an incalculable impact on the Japanese economy. Because, after the Plaza Accord, the yen appreciated dramatically, which had a considerable impact on Japan's export-oriented industries. In order to achieve the goal of economic growth, the Japanese government used loose monetary policies, such as lowering interest rates, to maintain the domestic economy. From 1986 onwards, the benchmark interest rate in Japan dropped dramatically, which led to a massive investment of surplus domestic funds in the stock market and real estate and other non-productive instruments, thus creating the famous Japanese bubble economy in the 1990s. In April 1990, the Ministry of Finance issued the Land Financing Restriction Order to intervene in the real estate market, which led to the collapse of the bubble economy. After the bubble burst in 1991, the Japanese economy was plunged into the biggest slump in the post-war period, which lasted for more than a decade, and there was still no sign of economic recovery in Japan. This was called the "lost decade" in Japan.