"Japan needs to work out a growth strategy and tackle structural problems such as the aging and shrinking population"
- Koya Miyamae, senior economist at SMBC Nikko Securities Co.
Shinzo Abe and Haruhiko Kuroda are both determined to revive growth in the world's third largest economy by any means necessary. While their efforts helped to boost growth and inflation in the land of the rising sun, they have also pushed assets held by the central bank by 41.6% at the end of 2013. The total value of assets reached 224.29 trillion yen due to the unprecedented stimulus programme under which the BoJ purchases government bonds. Since April the Bank of Japan has been buying around 7 trillion yen of Japan government bonds per month.
Central bankers all over the world have opted for the easy money option purchase securities by their own government. The pace of growth of BoJ assets has even exceeded the one at which Federal Reserve's assets are expanding, which saw its assets rising by 37.9% during the last year amid its stimulus programme.
The latest data means that central bank's ultra-loose monetary policy has been smooth; however, demand for cash from the private sector, which is considered to be the main driver of the economy, has yet to build up steam. Nevertheless, the fact that business spending remained unchanged in the third quarter is suggesting that even despite all efforts from the government and the central bank, companies are not committed to investment.
© Dukascopy Bank SA