“We are facing hyper-deflation, so we need a policy to create hyper-inflation. We have to do something to undermine the central bank and government’s credibility or else we won’t be able to halt the yen’s rise. So, while we know this is drastic medicine, we will do it,” said Koutaro Tamura, an upper house Diet member who will chair the new group.
The plan for the government notes came as Atsushi Mizuno, a board member of the BoJ, warned that the central bank, needed to take “extraordinary” measures to counter Japan’s deepening recession.
Warning that the Japanese economy would remain in a “severe” state, Mr Mizuno said it was “important to be ready to act promptly and consider taking policy action that may be considered extraordinary under normal circumstances”.