Entities

Bank of Japan

Bank of Japan

Acronym
BOJ
Entity Type
Link
Location

The Bank of Japan is the Central Bank of Japan

  • Has engaged on a massive asset purchase program since the 2008 Recession
  • Assets have eclipsed Japan's GDP in 2018
    • 65x+ Leverage
  • Asset purchases include both stocks and


1980s Mayekawa plan

  • In 1970s-80s Japan had massive export growth to the US
  • Better & cheaper exports to the US started to hollow out American Industry
  • This created huge political pressure and negotiations that Japan had to deal wit
  • Japans solution was to pump the Japanese Economy, thus ramping up US imports to compensate
  • Biggest component of plan was loose monetary policy
  • Drove massive bank lending Expansion:  BOJ required banks to increase lending, banks told branches to increase lending, branches told loan mangers to increase lending, etc.  
    • People down the line understood that they were creating a bubble, but did to since the order cam from up top
  • Results in massive asset price bubble in Japanese stocks and real estate


BOJ Criticisms

  • It has purchased (and continues to purchase) so many assets that markets are manipulated and have no price discovery
    • On some days no 2, 5 or 10 year government bonds publicly trade (the bank buys/owns them all)