masaaki shirakawa : revisiting the philosophy behind central bank policy speech by mr masaaki shirakawa, governor of the bank of japan, at the economic club of new york, new york, 22 april 2010. * * * introduction thank you for your kind introduction. it is a great pleasure and an honor to have the opportunity to speak today at the economic club of new york, with its over one hundred years of history at the heart of the world ’ s financial markets. 1907, the year this esteemed club was founded, is also remembered as the year when the united states was struck by a nationwide banking crisis. there had been a few unsuccessful attempts to set up a central bank before the crisis, but in the aftermath of the panic of 1907, the momentum to establish one strengthened, and the federal reserve system was created in 1913. interestingly enough, the bank of japan, the federal reserve and the economic club of new york have had ties since the early days. mr. benjamin strong, the first president, or at that time the governor, of the federal reserve bank of new york spent three months in japan in 1920, developing a strong personal bond with the then governor of the bank of japan, junnosuke inoue 1. on his return to the united states, governor strong donated many volumes of books to the bank of japan on the us financial system and the federal reserve. one of those books was, “ a history of currency in the unites states ”, written by the first chairman of this club, mr. barton hepburn 2. the book can still be found in our bank ’ s library, and by observing the red underlines on the pages of the book, i can comprehend that my predecessors had thoroughly read this book to study how the us had dealt with the financial crisis. speaking of financial crises, japan experienced a severe financial crisis in the 1920s, and this led to the introduction of on - site examinations of financial institutions by the bank of japan, which continues to be a valuable source of information for the central bank today. for several decades after this crisis, the japanese financial system did not face serious strains to its stability. however, from the mid - 1990s to the early part of the 2000s, we were once again hit by a major financial crisis. in the case of the us, the current financial crisis which started in august 2007 is the worst crisis since the great depression - era. i assume many of you who are sitting here

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