Due to COVID-19 Stimulus... Bank of Japan's Assets Increase at Largest Rate Since 1998

At the End of Last Year, Total Assets Reached 702 Trillion Yen... Up 23% from the Previous Year

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The Bank of Japan (BOJ) significantly increased its assets last year as it injected massive funds to counter the economic impact caused by the novel coronavirus disease (COVID-19).

According to the Nihon Keizai Shimbun on the 6th, the BOJ's total assets at the end of last year amounted to 702 trillion yen (approximately 7,422 trillion won), an increase of 129 trillion yen compared to the previous year. This marks the largest increase in amount since the BOJ began disclosing related data in 1998. The asset growth rate was 23%, the highest in four years.

The largest increase among major assets was in loans provided to banks and others. These loans reached 111 trillion yen at the end of last year, 2.3 times the amount in 2019. Nihon Keizai explained that the BOJ prioritized supporting corporate liquidity as a key task in response to COVID-19, which led to a sharp rise in loans. The volume of corporate paper (CP) and corporate bonds purchased also increased significantly, doubling the BOJ's holdings of CP and corporate bonds.

Additionally, to stabilize the financial market in response to COVID-19, the BOJ purchased a large amount of exchange-traded funds (ETFs). As a result, the BOJ's ETF holdings increased by 25% compared to a year earlier, reaching 35 trillion yen (book value basis).

The Japanese government's outstanding government bonds also increased by 11% to 535 trillion yen. In particular, short-term government bonds with less than one year until maturity rose 4.4 times to 41 trillion yen. The BOJ absorbed the short-term government bonds issued by the government to implement COVID-19 measures.

Nihon Keizai noted that when looking at the total asset growth rate, the BOJ's 23% increase was somewhat lower compared to the U.S. Federal Reserve's (Fed) 77% and the European Central Bank's (ECB) 49%. However, it added that while the BOJ's fund supply helps facilitate corporate cash flow and maintain employment amid the COVID-19 spread, there are also criticisms that it is actually creating a bubble by raising stock prices despite economic activity being stagnant.

This content was produced with the assistance of AI translation services.