Living Large: Bank of Japan Sorts Challenges With Its Epic Size
- Buying longer-dated debt may help sustain record purchases
- Banks can use certain loans as collateral, as bonds dry up
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Talk about being big in Japan. With the central bank’s balance sheet surpassing three-quarters the size of the economy, policy makers are having to solve operational challenges to keep its reflation program going.
In changes that Bank of Japan Governor Haruhiko Kuroda himself conceded were hard to understand, the BOJ Friday took steps to make it easier to keep going with its record monetary stimulus. The statement sent the stock market on a roller-coaster ride, as equities surged when it first appeared the BOJ was boosting its purchases, then sank when traders saw that wasn’t the case.