Japan Financial Research Report
 
  Exit from QQE
 
What loss will the BOJ incur if it exits QQE right now? (20/September/17)

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

  The argument over the “exit” from unconventional monetary policy, the quantitative and qualitative monetary easing (QQE) that the Bank of Japan (BOJ) commenced in April 2013 has been growing heated in Japan. Adding to the fact that the US Federal Reserve and European Central Bank (ECB) are now exploring how to exit, or at least how to start “tapering” their bond purchases, it has been asked whether the BOJ should continue purchasing assets including Japanese government bonds (JGBs) and exchange traded funds (ETFs), despite the fact that massive losses could be incurred in the future. In this report, we will consider what loss will be incurred if the BOJ starts exiting immediately. Since the longer the monetary easing continues, the larger the loss that can be expected, the amount of loss estimated below may be regarded as the bottom line of the BOJ’s future losses.

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Back Numbers of Japan Financial Report
No.35: BOJ's ETF Purchases Expanding Steadily
- How long will the BOJ hold risky assets with no maturity? (6/JULY/17)
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)