S&P Says BOJ Most Likely to Adopt Helicopter Money Policy

The Bank of Japan (BOJ) is the central bank most likely to adopt “helicopter money” policy but not in its traditional sense, S&P Global’s chief global economist told CNBC.

“Helicopter money” is a term coined by Milton Friedman in 1969, and in its purest theoretical form, would involve giving cash directly to residents in order to stimulate growth.

However, in today’s context, “helicopter money has to be a kind of monetary policy and fiscal policy coming together as one thing,” said Paul Sheard, chief global economist at S&P Global.

Japan is one of the most likely candidate to adopt the unconventional policy, Sheard said.

The economy has struggled with deflation for two decades. Even after the BOJ’s massive qualitative and quantitative easing (QQE) program and venture into negative interest rates territory, the Asian economy hasn’t been able to boost domestic consumption and shake off deflation.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza