500 Yen (Local Autonomy Law) – Japan

In 2009, Japan was grappling with the severe aftermath of the global financial crisis, which had triggered a sharp appreciation of the yen as a "safe-haven" currency. The yen's surge, reaching a 13-year high against the dollar in late 2008, severely damaged the country's export-dependent economy. Major corporations like Toyota and Sony faced plummeting overseas profits, leading to historic losses and widespread job cuts. This created a deflationary trap, where falling prices and a strong currency discouraged spending and investment, threatening to deepen a recession that was already one of the worst among advanced economies.

The government and the Bank of Japan (BOJ) responded with aggressive but largely conventional measures. The BOJ had already cut its benchmark interest rate to 0.1% in late 2008, leaving little room for traditional monetary easing. In 2009, it focused on quantitative easing (QE) policies, such as purchasing commercial paper and corporate bonds to provide liquidity and stabilize financial markets. However, these actions were perceived as insufficient to halt the yen's climb or decisively combat deflation. Public debt, already the highest in the industrialized world, constrained fiscal policy, even as the new Democratic Party of Japan government launched stimulus packages.

This period set the critical stage for the more radical monetary experiments that would follow in the next decade. The persistent strength of the yen, entrenched deflation, and the limited impact of existing tools in 2009 highlighted the perceived need for a dramatic shift in policy. The experiences of this year directly paved the way for the "Abenomics" program in 2012, which would introduce unprecedented levels of monetary easing under BOJ Governor Haruhiko Kuroda, explicitly targeting a weaker yen and 2% inflation to break Japan's long-standing economic stagnation.