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The Big Take

A $430 Billion Cautionary Tale Inside Japan’s Central Bank

The world's boldest monetary policy experiment landed the Bank of Japan with a vast portfolio it just can’t quit.

The Bank of Japan headquarters in Tokyo.
The Bank of Japan headquarters in Tokyo.Photographer: Kiyoshi Ota/Bloomberg

In most of the world, exchange-traded funds are simply tools that allow investors to track a certain set of stocks. In Japan, they’ve been saddled with everything from propping up the market and boosting inflation, to accelerating economic growth, improving corporate governance and even encouraging gender equality.

Such wide-ranging goals have led the Japanese central bank to amass a whopping 80% of the country’s ETFs—equivalent to about 7% of its $6 trillion stock market—in less than a decade. That’s far further than any other central bank in the world has gone in trying to prime its economy via equities purchases. The Bank of Japan has also outpaced peers with its $3.7 trillion in net bond purchases.