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BOJ's assets hit another record on asset-buying, loans amid COVID

This photo shows the Bank of Japan headquarters building in Tokyo. (Mainichi)

TOKYO (Kyodo) -- Total assets held by the Bank of Japan climbed to a record 724.06 trillion yen ($6.3 trillion) in the six months to September, buoyed by asset purchases and funding support amid the COVID-19 pandemic, the central bank said Friday.

    The BOJ's assets, up 4.9 percent from a year earlier, are larger than the size of Japan's economy whose nominal gross domestic product is around 540 trillion yen. The Japanese central bank has been pumping liquidity to support economic growth and accelerate inflation toward its elusive 2 percent inflation target.

    Under its yield curve control program, the BOJ keeps 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 up the BOJ's holdings of Japanese government bonds to 528.03 trillion yen, down 0.4 percent from a year earlier.

    ETF holdings increased 5.9 percent to 36.21 trillion yen with an appraisal profit of 16.62 trillion yen, the largest on record, according to the BOJ data.

    The pace of increase, however, slowed sharply from the 24.5 percent seen in the same period last year.

    In March, the BOJ fine-tuned its policy kit to brace for protracted monetary easing while addressing its side-effects. It removed an annual purchase target for ETFs to make their buying more flexible and timely.

    The BOJ purchased ETFs only a few times in the six months to September, though its total holdings have ballooned with guidelines yet to be set on how to unload them in the future.

    The BOJ has provided funds to commercial banks that extend loans to financially struggling firms due to the COVID-19 pandemic. Total loans jumped 32.0 percent to 138.42 trillion yen.

    Major central banks like the U.S. Federal Reserve are moving to taper asset-buying in the face of accelerating inflation. But BOJ Governor Haruhiko Kuroda has said monetary easing should be maintained as the 2 percent target is still out of reach.

    In the six months, the BOJ said it paid 4.9 billion yen in special interest to 631 financial institutions such as commercial banks, under a program aimed at mergers and better business management among regional banks facing the challenge of low profitability.

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