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BOJ overstates household investment trust assets by staggering 30 trillion yen

Bank of Japan is pictured in Tokyo. (Mainichi, File)

The Bank of Japan (BOJ) mistakenly recorded the amount of assets households held in investment trusts, producing a staggering figure 30 trillion yen (approximately $270 billion) higher than the actual amount, it has emerged.

It was earlier thought the amount households had been investing in such funds in recent years was steadily rising, but it now turns out that the figure has actually been declining. The finding has shocked the securities sector, which had believed that the transfer of savings to investments was progressing.

The erroneous data surfaced in the central bank's Flow of Funds Accounts Statistics (FFA), which records movements of financial assets and liabilities among financial institutions, households and other sectors. The FFA's survey method is reviewed once a year. The bank found the overstated amount when calculating the revised figure for late June this year ahead of an announcement.

The error was caused by the BOJ listing investment trusts that were held by Japan Post Bank as being held by individuals.

When statistics from 2005 onward were revised retroactively, the amount that households held in investment trusts at of the end of December 2017 dropped from a pre-revised figure of 109.1 trillion yen to 76.4 trillion yen -- nearly 33 trillion yen lower. Furthermore, before the revision, the proportion of investment trusts among individual financial assets was thought to have increased from 3.8 percent in 2012 to 5.8 percent in 2017, but after the revision, it emerged that this figure had peaked at 4.6 percent in 2014, and had since declined to 4.1 percent in 2017.

The amount held by households in investment trusts is calculated by subtracting the amounts held by other sectors such as financial institutions from the total amount of the investment trust. Sources close to the central bank said that when the BOJ was working on revisions, it came to light that some of the assets held by Japan Post Bank that had been classified as "foreign bonds" were actually in investment trusts. After the revision, the amount held by financial institutions in investment trusts ballooned, and the amount held by households accordingly plummeted.

The fact that Japan Post Bank has recently boosted the amount of assets it holds in investment trusts with relatively good yields was a factor in the mistaken figure being so large.

The BOJ's Research and Statistics Department commented that there were many items to revise, and it had not been able to keep up with the revisions. However the securities industry has taken a harsh view of the situation.

"I could understand 3 billion, but a revision of 30 trillion yen to an individual index is unheard of," an angered official at one major securities firm said.

The government and the securities industry have been promoting policies to get people to invest household funds -- which often become tied up in savings -- with companies contributing to economic growth. The amount households held in investment trusts in the BOJ statistics was seen as representing the effectiveness of such policies, and so the latest finding is causing some in the industry and the government to rethink the situation.

"If individual moves toward investment are not proceeding up to the level we had imagined, then we need to rethink how we should go about things," said an official from the Financial Services Agency.

(Japanese original by Mamoru Ohara, Business News Department)

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