Bank of Japan Balance Sheet Charts
Inline with our intention to present many more central bank balance sheet charts over the coming months, here we present several charts of the Bank of Japan’s balance sheet in the usual format.
In stark contrast to the Eurosystem and the Federal Reserve system, the Bank of Japan’s balance sheet has remained relatively stable over recent years. As can be seen on the chart above, the total size of the BoJ’s balance sheet is still below the levels seen in December 2005! This should be a bit of a clue as to why the JPY continues its charge higher against the major currencies of the world (in particular against the USD):
Drilling down to the specific items on the assets side of the BoJ’s balance sheet we find that the quantitative stability mentioned above has been accompanied by qualitative stability. That is, the major assets have remained stable through time; the Japanese Yen has continued to be ‘good for’ Japanese Government Bonds, Financing & Treasury bills and Loans against pooled collateral. Although the quality of these items may have deteriorated over the years, we cannot help but conclude that the assets of the BoJ have remained in relatively good shape in recent years.
Looking at the assets on a proportional basis, we find evidence to confirm that the composition of the BoJ’s assets has remained stable. We would only note that the proportional holdings of JGBs and loans backed by pooled collateral have been increasing slowly at the expense of the shorter-term bills. Also, the BoJ’s favorite folly of intervening in the currency markets has been evident from the occasional blips in foreign currency assets.
In contrast to the explosion in ‘Reserve balance’ liabilities seen on the liabilities sides of the Fed’s & ECB’s balance sheets, the BoJ deposit liabilities have only increased slightly. Banknotes remain the primary liability of Japan’s central bank.
Recommended: Charting the Federal Reserve's Assets - 1915 to 2012