Japan Financial Research Report
  New phase of monetary easing has entered its sixth year
The BOJ’s Monetary Policy Dilemma
- Fear that whether the BOJ heads for an exit or maintains monetary easing, it will put a burden on the nation

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

The Bank of Japan’s (BOJ’s) new phase of monetary easing has entered its sixth year. Now shrinking its balance sheet, the Federal Reserve Bank (the Fed) is expected to be able to avoid incurring losses in the process of monetary normalization, but the BOJ will likely incur losses of more than 10 trillion yen and will have difficulty steering a balanced course between normalizing monetary policy and ensuring financial soundness. The prolongation of the new phase of monetary easing is merely the postponement of losses. In the meantime, the lending margin of private banks will narrow and could impede the financial intermediary function. Ultimately, the BOJ faces a dilemma because whether it heads for an exit or maintains monetary easing, it will put a burden on the government, namely future taxpayers, and will run into the problem of central bank independence. Can the BOJ claw back the losses though future seigniorage, i.e. the revenue that a government receives by issuing money? The BOJ should surely spell out the side effects of the new phase of monetary easing and outlook for an exit to come to an arrangement with the government on the distribution of profits and future losses.

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  A New Phase of Monetary Policy
Another Comprehensive Assessment of QQE
- What's the BOJ's Monetary Policy in a New Era?

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

Japan Center for Economic Research(JCER) and Official Monetary and Financial Institutions Forum(OMFIF) cohosted an international conference dubbed "A New Phase of Monetary Policy" in November 2017.

Back Numbers of Japan Financial Report
No.37: Yield Curve Control Has Enhanced Policy Sustainability
- Exit Made More Difficult by Continuing Purchases of Risky Assets (6/FEB/18)
No.36: What loss will the BOJ incur if it exits QQE right now? (20/SEPT/17)
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)