TOKYO (Kyodo) – Total assets held by the Bank of Japan hit a record 724.06 trillion yen ($ 6.3 trillion) in the six months leading up to September, supported by asset purchases and financial support in the context of the COVID-19 pandemic, the central bank said on Friday.
The BOJ’s assets, up 4.9% from the previous year, are larger than the size of the Japanese economy, which has a nominal gross domestic product of around 540 trillion yen. The Japanese central bank has injected liquidity to support economic growth and accelerate inflation towards its elusive 2% 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 bold monetary easing pushed the BOJ’s holdings of Japanese government bonds to 528.03 billion yen, down 0.4% from the previous year.
ETF holdings rose 5.9% to 36.21 trillion yen with valuation profit of 16.62 trillion yen, the highest on record, according to BOJ data.
The pace of the increase, however, has slowed sharply from 24.5 percent seen in the same period last year.
In March, the BOJ refined its policy kit to prepare for protracted monetary easing while tackling its side effects. He removed an annual buying target for ETFs to make their purchases more flexible and timely.
The BOJ only bought ETFs a few times in the six months leading up to September, although its total holdings exploded with guidelines yet to be defined on how to offload them in the future.
The BOJ has provided funds to commercial banks that provide loans to companies in financial difficulty due to the COVID-19 pandemic. Total loans jumped 32.0 percent to 138.42 trillion yen.
Major central banks like the US Federal Reserve are preparing to reduce their asset purchases in the face of accelerating inflation. But BOJ governor Haruhiko Kuroda said monetary easing should be maintained as the 2% target is still out of reach.
During the six months, the BOJ said it paid 4.9 billion yen of special interest to 631 financial institutions such as commercial banks, as part of a scheme to promote mergers and better business management. among regional banks facing the challenge of low profitability.