Bank of Japan’s total assets increased to 714.56 trillion yen in 2020, central bank data showed Thursday, quadrupled in eight years under Governor Haruhiko Kuroda’s aggressive monetary easing policy, national economy It has grown 1.3 times the scale.
The BOJ’s balance sheet expanded to March 31 due to the large-scale purchase of assets such as Japanese government bonds as part of its super-monetary policy and the increase in financial assistance to companies that are out of the COVID-19 pandemic.
As of the end of March 2013, the BOJ’s total assets were 164 trillion yen before taking bold monetary easing measures under the Kuroda administration.
Total assets increased from 604.48 trillion yen in the previous year, exceeding Japan’s nominal gross domestic product of 535.72 trillion yen in 2020.
Despite aggressive monetary easing, the Bank of Japan has yet to reach its 2% inflation target. According to the Bank of Japan’s forecast, even if Mr. Kuroda’s term ends in April 2023, the target has not yet been achieved.
The ratio of assets to GDP is higher than the ratio of other major central banks, including the US Federal Reserve, which purchased assets to fund the banking system.
Of the BOJ’s assets, Japanese government bonds increased 9.5% year-on-year to 532.17 trillion yen, and loans to financial institutions increased to 125.84 trillion yen.
Exchange-traded funds (investment funds traded on stock exchanges) hold up 20.7% to 35,880 billion yen.
The Bank of Japan is stepping up ETF purchases in the midst of market turmoil. ETF holdings are currently 51.51 trillion yen, and the BOJ’s unrealized profit at the end of March was 15.44 trillion yen.
However, the central bank estimates that if the Nikkei Stock Average of 225 stocks drops to about 20,000 shares, it will incur potential losses. On Thursday, the Nikkei closed at 28,549.01.
The pandemic further moved the BOJ’s inflation target further and urged fine-tuning policy tools to make monetary easing sustainable while addressing side effects.
One of the changes made in the March review was to remove the bank’s goal of buying ETFs at a rate of 6 trillion yen a year in response to criticism that aggressive purchases have become top holders. Was to carry out flexible asset purchases. Japanese Equity — Distorted Market Mechanism.
Bank of Japan policymaker Jin Suzuki said Wednesday that central banks need to continue buying ETFs, but should “control” the pace of increase in holdings due to their impact on their balance sheets.
In a policy review, following criticism that the BOJ’s large-scale purchases have absorbed market liquidity, the BOJ will allow 10-year Treasury yields to move more widely than before by adjusting purchases. Was also decided.
Through banking efforts to keep both short-term and long-term interest rates low and stable, banks have already swallowed large amounts of Japanese government bonds and own more than 40% of outstanding government bonds.
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