Japan Financial Research Report
  BOJ's ETF Purchases
BOJ's ETF Purchases Expanding Steadily
- How long will the BOJ hold risky assets with no maturity?

  JCER Financial Research Team
   Ikuko FUEDA-SAMIKAWA (Principal Economist)
   Tetsuaki TAKANO (Economist)

  The Bank of Japan has recently announced that its total assets, including Japanese government bonds (hereinafter referred to as “JGBs”) and exchange-traded funds (hereinafter referred to as “ETFs”), exceeded 500 trillion yen at the end of May for the first time. This amount is now comparable to Japan’s nominal Gross Domestic Product (GDP), and the ratio is far higher than those of other major central banks. Under the current “inflation-overshooting commitment,” the BOJ is expected to expand the monetary base until the year-on-year rate of increase in the observed consumer price index (CPI) exceeds the price stability target of two percent and remains above the target in a stable manner, but the method of achieving the goal is likely to be quite protracted. Will the Bank face a purchasing limit or any risk in expanding its balance sheet? Following the May 23 report on the BOJ’s purchases of JGBs, the Bank’s holdings of ETFs will be considered in this report. What are the implications of the central bank’s holdings of ETFs? Since maturity or redemption does not come to ETFs, their credit risk and price fluctuation risk appear to be relatively high. Is there any risk of the BOJ facing difficulty in the process of “monetary normalization,” i.e. the exit from the current unconventional monetary policy?

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Back Numbers of Japan Financial Report
No.34: Pace of Increase in BOJ’s Holding of JGBs Slowing
- Does the purchase limit risk still remain? (23/MAY/17)
No.33: Narrowing Monetary Policy Options
- Can FTPL be an effective means of escaping deflation? (7/APR/17)
No.32: BOJ's JGB Purchasing Limits to be Reached in Summer 2017
- Is the Bank carrying out Fiscal Policy? (28/NOV/16)
No.31: From Quantity to Interest Rate Focus: BOJ Drops Monetary Base Target
- Flexible JGB Buying Added as Long-Term Interest Rate Policy Focus (21/SEPT/16)
No.30: Risks and Challenges for BOJ after breaking through ZLB
- Accelerate move toward establishing a "Cashless Society" (13/APR/16)
No.29: Risks from Extending the QQE Policy
- Bank of Japan’s JGB Purchases to reach Limits in June 2017(27/JAN/16)
No.28: Surprise Supplementary Measures for QQE Announced
- BOJ plays down Concerns over JGB Purchasing Limits?(21/DEC/15)
No.27: Plunge in New Housing Starts Means Existing Homes Market Expansion Is Key(JAN/15)
No.26: Regional Finance in an Age of Population Decline(JAN/15)
No.25: Quantitative and Qualitative Monetary Easing Effects and Associated Risks(DEC/13)
No.24: Opportunities and Risks for Japan's Financial Industry to Ensure Growth(APR/13)
No.23: Financial Markets Grope for Stability and Growth:Nagging Impaired Loan Assets, Currency Worries(APR/12)
No.22: Options for Kick-Starting Economy amid Risks of Worsened Deflation(MAR/10)
No.21: Global Crisis Testing Financial Strength of Banks and Life Insurance Firms(NOV/09)
No.20: Deflation Outlook Worse than Nineties(MAR/09)
No.19: The U.S.-Sparked Financial Crisis and the Japanese Financial System(OCT/08)
No.18: Prices and Monetary Policy in Times of Rising Energy Prices(MAR/08)
No.17: From Recovery to Reform:The Future Direction for Regional Banks and Life Insurance Companies(OCT/07)
No.16: The Downside Risks in the Japanese Economy(MAR/07)
No.15: We need to prepare ourselves for higher interest rates(OCT/06)
No.14: Public lenders need tough oversight(MAR/06)
No.13: Postal Privatization in Japan and the Future of Banks and Life Insurers (OCT/05)
(PDF) E1 E2 E3
No.12: China Strikingly Similar to 1971 Japan(MAR/05)
No.11: Japan's Pension Reform and the Current Status of Banks and Life Insurers (OCT/04)
(PDF) E1 E2 E3
No.10: Three downside risks in the economy (MAR/04)
No.9: The Profitability of Japanese Industries: Non-financial Sectors, Banks and Life-Insurance Companies (OCT/03)
(PDF) E1 E2 E3
No.8: Accelerating Deflation and Monetary Policy (MAR/03)
No.7: The deteriorating Japanese financial system (OCT/02)
No.6: Credibility of Government, Corporate, and Banking Sectors in Japan (MAR /02)
No.5: Deflation and Financial System Reform in Japan (OCT /01)
(PDF) E1 E2 E3 E4
No.4: Manipulation of Monetary Policy under Deflationary Economy; Strategy to Revive the Japanese Economy (MAR /01)
No.3: Indicators of health of life insurance companies need tightening (OCT /00) Contents Table
No.2: Bad Loan Problems and the Financial Market (MAR /00)Contents Table
No.1: Exchange Rate Movements And Adjustment of Balance Sheet in Japan (OCT /99)