Money and Influence: Japanese Power in the International Monetary and Financial System

Abstract

In the past few years, much attention has been paid to the growing power of Japan in the international monetary and financial system. At the end of the day, however, opinions vary considerably about the degree of this power. Robert Gilpin, to provide one example, portrays Japan as the dominant financial power of today.1 Susan Strange, on the other hand, asserts that Japanese power in the international economy is still quite limited.2 This chapter argues that the confusion might stem in part from the fact that Japan’s growing influence in the international monetary and financial system is derived from two separate although interconnected developments: Japan’s emergence as a creditor nation and the internationalisation of the Japanese financial system. Each of these can be seen to have brought a different kind of power to the Japanese state. Creditor status can be seen to have given Japan a certain amount of ‘relational power’ — defined by Strange as ‘the power of A to get B to do something that they would not otherwise do’ — while internationalisation has allowed Japan to acquire a degree of ‘structural power’, which in Strange’s terms is the power to ‘change the range of choices open to others’.3 In what follows, each of these phenomena is outlined in turn and analysed in terms of its impact on the influence of the Japanese state in the international monetary and financial system.