The BOJ’s assets hit another record for asset purchases and credit amid COVID

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This photo shows the main building of the Bank of Japan in Tokyo. (Mainichi)

TOKYO (Kyodo) – The Bank of Japan’s total assets rose to a record 724.06 trillion yen ($ 6.3 trillion) in the six months to September, helped by asset purchases and funding assistance during the COVID- 19 pandemic, the central bank said Friday.

The BOJ’s assets, up 4.9 percent year over year, are larger than the Japanese economy, whose nominal gross domestic product is around 540 trillion yen. Japan’s central bank has pumped liquidity to support economic growth and accelerate inflation toward its elusive 2 percent inflation target.

As part of its yield curve control program, the BOJ is keeping short and long-term interest rates low by buying Japanese government bonds. It also buys exchange traded funds, commercial paper and corporate bonds.

Years of courageous monetary policy easing pushed the BOJ’s holdings of Japanese government bonds to 528.03 trillion yen, 0.4 percent less than last year.

ETF holdings rose 5.9 percent to 36.21 trillion yen, with a valuation gain of 16.62 trillion yen, the highest value ever, according to BOJ data.

However, the rate of growth slowed significantly from 24.5 percent in the same period of the previous year.

In March, the BOJ refined its monetary policy kit to prepare for lengthy monetary easing while addressing its side effects. An annual buy target for ETFs has been removed to make their purchases more flexible and timely.

The BOJ only bought ETFs a couple of times in the six months to September, though their total holdings have not yet been set with guidelines on how to discharge them in the future.

The BOJ has made funds available to commercial banks that are granting loans to financially troubled companies due to the COVID-19 pandemic. Total loans increased 32.0 percent to 138.42 trillion yen.

Big central banks like the US Federal Reserve are starting to cut asset purchases as inflation accelerates. However, BOJ Governor Haruhiko Kuroda said that monetary easing should be maintained as the 2 percent target is still out of reach.

Over the six months, the BOJ said it paid 4.9 billion yen to 631 financial institutions such as commercial banks under a program aimed at mergers and better business management between regional banks facing the challenge of low profitability.


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