Monday , March 27 2023

The capital of the Bank of Japan is now higher than the economy


Flag of Japan on top of Bank of Japan building in Tokyo (Reuters image)

The Bank of Japan's large-scale fundraising program has entered undiscovered territory, and now its balloon is currently higher than the country's annual economic performance.

Their holding reached an incredible 553.6 trillion yen ($ 4.9 trillion), according to data released on Tuesday, compared to a nominal gross domestic product of 552.8 trillion yen at the end of June. Wednesday's data is expected to show the economy that was contracted in the quarter to September, which increases the gap.

To set a milestone in perspective: Federal Reserve assets account for about 20% of US GDP, and the European Central Bank's assets are about 40% of the eurozone economy. And while BOJ significantly reduced the amount of Japanese government bonds it buys, its JGB stock continues to expand.

With half-inflation at 2% targeted by BOJ and Prime Minister Shinzo Abe's government, asset acquisition will continue in the foreseeable future, even if the growth rate slows down. A comparison of tax sales planned for October of next year, after which the demand for a building boom in the Olympic Olympic Games in 2020 is slowing down, is likely to imply continuing pressure on the central bank to continue the tempting economy.

"There is no consensus theory on how much the central bank's assets can gain before it becomes dangerous," said Nobuias Atago, chief economist at Okasan Securities Co.. and a former BOJ official. "There is an unclear feeling of discomfort when the property continues to increase, but it's not clear on which level of things to stop."

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