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Market Operations in Fiscal 2020

September 9, 2021
Financial Markets Department
Bank of Japan


During fiscal 2020 (April 1, 2020 to March 31, 2021), the Bank of Japan pursued powerful monetary easing under the framework of Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control with a view to achieving the price stability target of 2 percent.

Based on the foregoing, as part of countermeasures against the impact of COVID-19, the Bank conducted (1) purchases of CP and corporate bonds as well as the Special Funds-Supplying Operations to Facilitate Financing in Response to the Novel Coronavirus (COVID-19) under the Special Program to Support Financing in Response to the Novel Coronavirus (COVID-19); (2) an ample and flexible provision of funds mainly through purchases of JGBs and U.S. dollar funds-supplying operations; and (3) active purchases of ETFs and J-REITs. These were carried out with the aim to support financing, mainly of firms, and to maintain stability in financial markets.

At the Monetary Policy Meeting (MPM) held on March 18 and 19, 2021, the Bank conducted an assessment for further effective and sustainable monetary easing, and decisions such as the following were made: to establish the Interest Scheme to Promote Lending; to clarify that the range of 10-year JGB yield fluctuations would be between around plus and minus 0.25 percent from the target level, in order to flexibly conduct yield curve control during normal times; and to purchase ETFs and J-REITs as necessary with upper limits of about 12 trillion yen and about 180 billion yen, respectively, on annual paces of increase in their amounts outstanding and to maintain these upper limits even after COVID-19 subsides.

Under the monetary policy described above, with respect to yield curve control, the Bank applied a negative interest rate of minus 0.1 percent to the policy-rate balances in current accounts held by financial institutions at the Bank for short-term interest rates and purchased JGBs so that 10-year JGB yields remain at around 0 percent for long-term interest rates, which is in line with the guideline for market operations determined at each MPM. Based on the above, 10-year JGB yields stayed at around 0 percent and a yield curve consistent with the guidelines for market operations was formed throughout fiscal 2020.

With respect to purchases of assets other than JGBs, the Bank purchased a wide range of assets, including ETFs, J-REITs, CP, and corporate bonds, in line with the guidelines for asset purchases also determined at each MPM.

This paper elaborates on these market operations in fiscal 2020. The rest of this paper is organized as follows. First, Chapter II provides an outline of the Bank's market operations. Next, Chapter III describes the developments in financial markets such as Japanese money markets and bond markets, and the conduct of each measure in market operations. Chapter IV discusses changes in the frameworks related to market operations. Finally, Chapter V presents the Bank's actions to enhance dialogue with market participants.


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Financial Markets Department, Bank of Japan
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Market Operations Division, Financial Markets Department

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