Former Japanese Prime Minister Fumio Kishida warned that without a $2.3 trillion growth strategy, merely relying on foreign exchange market interventions will not be able to save the yen.

Former Japanese Prime Minister Fumio Kishida stated that although the U.S.-Japan joint intervention temporarily supports the yen's exchange rate, it is not a transformative action for the currency itself or the Japanese economy. He is advocating for a growth strategy worth 370 trillion yen (about $2.3 trillion), which he believes is the long-term vision to change Japan's national fortunes. In an interview on Wednesday, Kishida pointed out, "In terms of exchange rates, intervention may buy some time, but if the economic fundamentals and overall environment do not fundamentally change, the effects will be limited." It is understood that the U.S. and Japan announced on Monday that they jointly intervened in the foreign exchange market to bolster the yen last Friday. Kishida currently heads a policy group within the ruling party, which previously advised Prime Minister Sanae Takaichi on a 14-year growth plan covering 17 strategic areas. Regarding funding for this plan, Kishida is unconcerned and cites Japan's burgeoning semiconductor and artificial intelligence (AI) industries as examples of the potential for accelerated economic growth. He stated, "The government should act as a catalyst, using public funds as seed capital to attract private investment, including Japan's 2,300 trillion yen in household financial assets, as well as significant overseas investment. If we only rely on the government's own financial resources, then nothing can be achieved." Kishida also emphasized that conveying this macro vision to the market helps reassure investors, while also stressing the importance of enhanced communication between the government and the Bank of Japan, and affirming the Banks independence. These remarks come as Takaichi is attempting to drive accelerated economic growth in Japan through government funding, despite growing concerns about the sustainability of Japan's finances. As one of the major economies with the heaviest debt burden, Takaichi is actively promoting an increase in defense spending while advancing the reduction of the food consumption tax. However, details regarding the funding sources for these plans remain unclear. Takaichi has promised to clarify the details gradually over the coming weeks as the budget process reforms, but this has caused unease among investors. This ambitious growth plan is organized into a simplified 14-year cycle, targeting a domestic investment of over 26 trillion yen annually. Even if the government only covers one-third of this investment, it far exceeds the annual fiscal burden resulting from the consumption tax cuts. Kishida indicated that the issue is not the numbers themselves, but rather the confidence in the direction of Japan's economic development. He noted, "Simply throwing out a numerical target does not immediately convince foreign investors or win their trust. The key is to present a clear long-term vision. Once that is achieved, people will see the enormous opportunities it holds." Kishida pointed out that there have been successful public-private partnerships in strategic industries, citing the examples of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) and Micron Technology, Inc. (MU.US) establishing factories in Japan. He added that this growth strategy extends that approach to other fields. The 17 strategic areas designated in the plan include AI, semiconductors, and more segmented emerging industries such as content creation and food technology. The Ministry of Economy, Trade and Industry of Japan has allocated up to 500 billion yen to support Micron Technology, Inc. in expanding its factory in western Japan, which accounts for about one-third of the total cost of producing advanced memory chips for that project. Under Takaichi's leadership, the ministry's budget support for advanced semiconductors and AI development has increased to approximately 1.23 trillion yen this fiscal year, nearly quadrupling its previous level. Kishida stated, "I absolutely do not think this is a castle in the air. What is important is to carefully assess the international community's response and advance the project accordingly." Kishida also mentioned that the government must fulfill its responsibilities in fiscal and monetary policy to prevent the significant joint intervention efforts by the U.S. and Japan from going to waste. The market generally believes that Takaichi is pressuring the Bank of Japan to adopt a more dovish monetary policy stance, even as the central bank governor Kazuo Uedawho Kishida himself appointed during his term as Prime Ministergradually pushes forward with interest rate hikes. When asked if the government supports an interest rate increase in September or October, Kishida responded, "It is important to reaffirm and communicate the basic principlethat monetary policy is independently decided by the Bank of Japan, and the government will not interfere in that decision." Kishida hinted that not only does communication need to be strengthened between the government and the Bank of Japans leadership, but there should also be improved practical exchanges to better coordinate and relay information to the market. He remarked, "The Prime Minister meets with the Governor occasionally, but some believe that communication below the senior level is still insufficient. Perhaps enhancing communication at this level could be helpful, making it easier for the market to understand policy intentions." During his term as Prime Minister from 2021 to 2024, Kishida experienced a series of historic events both domestically and internationally, including the Russia-Ukraine conflict, the end of the COVID-19 pandemic, and Japan encountering inflation for the first time in decades. Amid these changes, Kishida devised policies to encourage households to shift from saving to investing and established a tax-exempt investment account mechanism, under which nearly 28 million new accounts had been opened by the end of 2025. While some have proposed directly including government bonds in tax-exempt investment products, Kishida takes a cautious stance, arguing that it is inappropriate to include what is considered a safe asset like government bonds. He stated, "The core aim of Japan's drive to become a major asset management nation is to guide household financial assets towards riskier investments such as stocks. In other words, the policy goal is to encourage the public to shift from saving to investing."