Former BOJ governor: It's time to rethink monetary policy

The former governor of the Bank of Japan says it is time for central banks around the world to rethink the foundation and framework of monetary policy.

Shirakawa Masaaki says the limitations of inflation targeting has become clear.

Shirakawa was the BOJ governor until 2013. He shared his thoughts in the March issue of the International Monetary Fund's quarterly publication.

He said the impact of the BOJ's ultra-loose monetary policy implemented by his successor and current governor Kuroda Haruhiko in 2013 was modest both on the inflation front and the growth front.

Shirakawa said this was also the case in many other countries that adopted measures similar to Japan's.

He acknowledged that such unconventional monetary policy could be extremely effective depending on the timing. But he said this is not necessarily the case when the economy is weak.

Shirakawa said Japan's stagnant growth due to its rapidly aging and shrinking population required more radical reform, but that this had been misread as a cyclical weakness. This resulted in decades of monetary easing.