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Pandemic-relief measures expand Bank of Japan's assets by 18per cent

Pandemic-relief measures expand Bank of Japan's assets by 18per cent

FILE PHOTO: A man wearing a protective mask walks past the headquarters of Bank of Japan amid the coronavirus disease (COVID-19) outbreak in Tokyo, Japan, May 22, 2020.REUTERS/Kim Kyung-Hoon/File Photo

TOKYO: The Bank of Japan's asset holdings as of end-March rose 18.2per cent from a year earlier, as it aggressively pumped money via asset purchases to cushion the economic blow from the COVID-19 pandemic, data from the central bank showed on Thursday.

The total balance of asset holdings stood at 714.6 trillion yen (US$6.6 trillion) at the end of the fiscal year on March 31, the Bank of Japan (BOJ) data showed, far exceeding the roughly 530-trillion-yen size of the country's economy.

The increase highlights the massive scale of the BOJ's money printing last year, when it ramped up government bond and risky asset buying and boosted loans to financial institutions in hope of channelling more money to pandemic-hit small firms.

Loans extended by the BOJ rose 71.5 trillion yen from a year earlier to 125.8 trillion yen as of end-March, the data showed.

The BOJ's government bond holdings rose 46.2 trillion yen to 532.2 trillion yen. Its holdings of exchange-traded funds (ETFs) were up 6.2 trillion yen at 35.9 trillion yen, the data showed.

The market value of the BOJ's ETF holdings exceeded book value by a record 15.4 trillion yen, aided by recent gains in stock prices, the data showed.

The BOJ guides short-term interest rates at -0.1per cent and caps long-term rates around zero as part of efforts to fire up inflation to its 2per cent target.

It also buys huge sums of government bonds and risky assets such as ETFs to pump money into the economy.

Years of heavy asset buying has bloated the BOJ's balance sheet with risky assets vulnerable to price swings, stoking concern over its financial health.

But the BOJ's capital-to-asset ratio rose to 8.87per cent as of end-March, from 8.79per cent a year earlier, helped by rising latent profits for its ETF holdings.

BOJ's shares stood at 31,500 yen, up more than 25per cent since the start of the year.

(US$1 = 109.0900 yen)

(Reporting by Leika Kihara; Editing by Himani Sarkar)

Source: Reuters

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