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Money Market Operations in Fiscal 2014

July 30, 2015
Financial Markets Department
Bank of Japan

Introduction

During fiscal 2014 (April 1, 2014 to March 31, 2015), following on from the previous fiscal year, the Bank of Japan pursued extremely powerful monetary easing under quantitative and qualitative monetary easing (QQE) and significantly increased the amount outstanding of the monetary base through purchases of a wide range of assets, including large-scale purchases of Japanese government bonds (JGBs).

In the period through October 2014, the Bank conducted its money market operations so that the monetary base would increase at an annual pace of about 60-70 trillion yen through purchases of a wide range of assets, including purchases of JGBs, treasury discount bills (T-Bills), CP, corporate bonds, exchange-traded funds (ETFs), and Japan real estate investment trusts (J-REITs). This was in accordance with the guideline for money market operations under QQE introduced in April 2013.

At the Monetary Policy Meeting (MPM) held on October 31, 2014, the Bank decided on the expansion of QQE. Specifically, the annual pace of increase in the monetary base was accelerated from about 60-70 trillion yen to about 80 trillion yen, and the pace of increase in the Bank's JGB holdings was expanded from about 50 trillion yen per year to about 80 trillion yen per year. In addition, the average remaining maturity of the Bank's JGB purchases was extended from about 7 years to about 7-10 years. Furthermore, a decision was made to triple the annual paces of increase in the amount outstanding of its holdings of ETFs and J-REITs to about 3 trillion yen and 90 billion yen, respectively. The Bank has since purchased assets at an increasingly high pace in accordance with this new guideline for money market operations.

As a result of these money market operations, the monetary base at the end of 2014 stood at 275.9 trillion yen, an increase of 74.0 trillion yen from the same time a year earlier. Furthermore, the Bank's operations continued to steadily increase the monetary base, which reached 295.9 trillion yen at the end of March 2015, up 76.0 trillion yen from a year earlier. The amount outstanding of JGBs held by the Bank reached 201.8 trillion yen at the end of 2014, up 60.2 trillion yen from a year earlier, and 220.1 trillion yen at the end of March 2015, up 66.0 trillion yen from a year earlier.

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