The idea of the MCI originated from Central Bank of Canada.
It was used to measure the degree of ease or tightness in the monetary system.
In the early 1990s, Central Bank of Canada, Sweden, Norway, and New Zealand all built the MCI to serve as an indicator of monetary policy stance and operational target.
This paper attempted to construct the MCI for Japan by using a Vector Autoregression (VAR) approach in order to see the effect of changes in the exchange rate and the interest rate on GDP.
The weight obtained from VAR approach was then used as a coefficient in constructing the MCI for Japan.