- 桃山学院大学総合研究所紀要 = ST.ANDREW'S UNIVERSITY BULLETIN OF THE RESEARCH INSTITUTE (ISSN:1346048X)
- vol.28, no.3, pp.205-213, 2003-03-20
The Policy Board of the Bank of Japan announced the stock purchasing plan on September 18, 2002 (“New Initiative Toward Financial System Stability”) in which the Bank would explore possible policy measures to enhance financial institutions’ efforts to reduce their shareholdings. And on October 11, at a regular board meeting, the Board approved basic guidelines on the purchase of stocks held by commercial banks. The purpose of this plan is to secure financial system stability and to foster disposal of nonperforming loans. This plan is not traditional but truly exceptional in the history of the central bank of the world. We will research the facts and the reviews about the plan, and make it clear the problem of it. Our conclusion is that not only this plan is no main job of the central bank but also the plan will injure credibility of the Bank of Japan. Because stocks are very risky assets, the central bank should not have such a risky asset as stocks. It is true that it has some positive effect to secure the stability of financial system, but at the same time it has negative effect on the quality of the asset of the BOJ.