Japan's former Prime Minister Fumio Kishida has stated that while the coordinated intervention between the US and Japan has temporarily supported the yen's exchange rate, it is not a turning point for either the currency or the Japanese economy. He is strongly advocating for a growth strategy worth 370 trillion yen (approximately $2.3 trillion), which he believes is a long-term vision that could change Japan's national trajectory.

In an interview on Wednesday, Kishida noted that "in terms of exchange rates, intervention might buy some time, but if the economic fundamentals and the broader environment do not undergo a fundamental change, its effect will be limited to that." The US and Japan announced on Monday that they had jointly intervened in the foreign exchange market last Friday to boost the yen. Kishida currently heads a policy group within the ruling party that has advised Prime Minister Shigeru Ishiba on formulating a 14-year growth plan covering 17 strategic sectors.

Regarding the funding for this plan, Kishida dismissed concerns, citing the burgeoning semiconductor and artificial intelligence (AI) industries in Japan as examples of potential for accelerated economic growth. He stated that "the government should act as a catalyst, using public funds as seed money to attract private capital, which includes Japan's 2,300 trillion yen in household financial assets and substantial overseas investment. If we are limited only to the government's own fiscal resources, nothing can be achieved." Kishida also emphasized that communicating 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 (BOJ) and demonstrating the BOJ's independence.

These remarks come as Ishiba attempts to accelerate Japan's economic growth through government funding, despite growing concerns over the country's fiscal sustainability. As one of the most heavily indebted nations among major economies, Ishiba is pushing for increased defense spending while also advancing plans to cut the consumption tax on food. However, the funding details for these plans remain unclear. Ishiba has promised to clarify the details in the coming weeks as part of budget process reforms, but this has already unsettled investors.

The ambitious growth plan, simplified over a 14-year cycle, aims to achieve an average annual domestic investment of over 26 trillion yen. Even if the Japanese government bears only one-third of that investment, it would far exceed the annual fiscal burden brought by the consumption tax cut. Kishida said the issue is not about the numbers, but about confidence in the direction of Japan's economic development. He noted that "simply throwing out a numerical target cannot immediately convince or win the trust of overseas investors. The key is to present a clear long-term vision. Once that is achieved, people can see the enormous opportunities within it."

Kishida pointed to successful examples of public-private partnerships in strategic industries, citing the construction of plants by Taiwan Semiconductor Manufacturing Co Ltd (NYSE: TSM) and Micron Technology Inc (NASDAQ: MU) in Japan. He added that the growth strategy expands this approach to other sectors. The 17 strategic areas designated in the plan include AI, semiconductors, and more niche emerging industries like content creation and food technology. Japan's Ministry of Economy, Trade and Industry has already allocated up to 500 billion yen to support Micron Technology's expansion of a factory in western Japan, an amount that covers about one-third of the total cost for the project to produce advanced memory chips. Under Ishiba's leadership, the ministry's budget support for advanced semiconductor and AI development this fiscal year has increased to about 1.23 trillion yen, nearly quadrupling from previous levels. Kishida stated, "I absolutely do not believe this is a castle in the air. The important thing is to carefully assess the international community's response and proceed with the project accordingly."

Kishida also argued that the government must fulfill its responsibilities in fiscal and monetary policy to ensure the historic US-Japan joint intervention efforts are not in vain. Market consensus suggests Ishiba is pressuring the BOJ to adopt a more dovish monetary policy stance, even as BOJ Governor Kazuo Ueda—whom Kishida personally selected as the central bank's head during his tenure as prime minister—is gradually proceeding with interest rate hikes. When asked if the government supports a rate hike in September or October, Kishida responded that "it is important to reiterate and convey the basic principle that monetary policy is independently determined by the BOJ, and the government will not interfere with this decision."

Kishida suggested that in addition to strengthening communication between top government and BOJ officials, there should be enhanced exchanges at the operational level to better coordinate and convey information to the market. He said that "the prime minister and the governor meet occasionally, but some believe that communication below the top level is not sufficient. Perhaps strengthening this level of communication would be helpful, so that the market might also find it easier to understand the policy intent."

During his tenure 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's first bout of inflation in decades. Amid these changes, Kishida formulated policies to encourage households to shift from savings to investment, establishing a tax-free investment account mechanism that has seen nearly 28 million new accounts opened by the end of 2025. While some have proposed directly including government bonds in tax-free investment products, Kishida is cautious, believing it is inappropriate to include assets traditionally considered safe. He stated that "the core intention of Japan's ambition to become a major asset management nation is to channel household financial assets into risk-oriented investments like stocks. In other words, the policy goal is to drive the nation's shift from savings to investment."