Japan’s quantitative easing

According to Pimco, the execution of QE in Japan “required the BoJ to purchase trillions of yen of financial securities, including about $120 billion per year of Japanese government bonds in an operation known as “Rinban.” The BoJ also purchased asset-backed securities and equities, and extended the terms of its commercial bill purchasing operation up to 12 months. The combined effect of these operations was to effectively flood the Japanese financial system with excess liquidity.”

The Bank of Japan purchased the shareholdings of some banks(RIETI); it increased these purchases in 2003(BOJ); made other purchases significantly increasing its’ balance sheet(MOF):

All of this activity has not been effective in eliminating deflation in Japan; just weeks ago their government announced that “Prices fell last quarter at the fastest pace in more than half a century, a government report showed Feb. 15. The Cabinet Office report said Japan’s deflator for gross domestic product fell 3 percent, the biggest drop since records began in 1955.”


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