• Kyodo

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Former Bank of Japan Gov. Masaaki Shirakawa stressed the need to take unconventional steps to help underpin the economy in October 2010 but cautioned that the decision to purchase exchange-traded funds would entail risks, meeting minutes showed Monday.

The BOJ decided on its first-ever purchase of ETFs, which are riskier in terms of price volatility than assets the bank had previously bought, at a policy meeting on Oct. 5 of the year under what it called “comprehensive monetary easing.”

“It means that we cannot make up for possible losses with (money in) our pocket, but would pass the burden on to the public,” Shirakawa said in warning other BOJ policy members of the risk if stock prices fell and other assets it bought lost value, according to the minutes.

The meeting was held at a time of growing concern over the economy as the U.S. dollar fell to the lower ¥82 range in September 2010, prompting the Japanese government to go ahead with its first yen-selling intervention in the currency market in more than six years.

The BOJ continued to buy ETFs under Shirakawa’s successor Haruhiko Kuroda, the current head of the central bank who took office in 2013. Its annual purchases total ¥12 trillion ($116 billion) under its current massive asset purchase program.

As of the end of November, the BOJ owned ETFs worth about ¥45 trillion in market value, accounting for roughly 7% of the market capitalization of firms listed on the first section of the Tokyo Stock Exchange, according to an estimate by Shingo Ide, chief equity strategist at the NLI Research Institute.

However, the BOJ has yet to achieve its 2% inflation target following the decade of purchases of ETFs and has failed to return to policy normalization, although it has latent profits on its holdings of the funds and has avoided logging losses thanks to rising stock prices.

At the 2010 meeting, the BOJ policymakers decided to guide its key short-term interest rate to between zero and 0.1% from the 0.1% target, returning to the zero-interest rate policy for the first time in over four years, and set up a fund to buy ETFs and other assets worth around ¥5 trillion.

At the moment, the central bank is maintaining its ultraeasy monetary policy, keeping short-term rates at minus 0.1% while guiding long-term rates at around zero percent.

The BOJ releases full minutes of monetary policy meetings from 10 years ago, including names of speakers, biannually in principle. It publishes summary minutes of each policy meeting one month after the meeting, without specifying speakers.

The minutes made available Monday covered monetary policy meetings held between July and December 2010.

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