Princes of the Yen: Lessons for Today’s Business Leaders

Princes of the Yen – Central Bank Power and Business Strategy

When most people think of economic transformation, they picture governments, politicians, or big corporates driving change. But Richard Werner’s Princes of the Yen tells a very different story.

It reveals how Japan’s post-war economic miracle, its devastating bubble, and the painful “Lost Decade” were not accidents of history—but the result of deliberate policy decisions made by a handful of unelected central bankers inside the Bank of Japan.

This is a story of power, secrecy, and the hidden role of credit in shaping economies—and it carries profound lessons for today’s business leaders navigating the AI-driven transformation of global markets.

The Hidden Lever: Credit Creation

Werner dismantles a myth taught in most business schools: that interest rates and fiscal stimulus drive growth. In Japan’s case, these were sideshows.

The real driver? Credit creation—how much money banks created through lending, and to whom.

• When the BoJ wanted growth, it expanded credit to industry.
• When it wanted restructuring, it withdrew credit, starving firms of liquidity.

The consequences were vast: the 1980s real estate bubble, the crash, and the prolonged stagnation of the 1990s all stemmed from how the BoJ used this hidden tool.

Engineering a Crisis

One of Werner’s most striking claims is that Japan’s “Lost Decade” was no accident.

The BoJ could have reflated the economy by expanding credit in 1992. Instead, it tightened the taps, sterilised government interventions, and prolonged the recession.

Why? To force structural reform—dismantling Japan’s post-war “war economy” system of lifetime employment, cross-shareholdings, and bureaucratic controls—and to secure greater independence and power for the central bank.

In short, recession was used as a weapon of transformation.