Author: Tatsuyoshi Okimoto, Visiting Fellow RIETI, ANU
The Bank of Japan (BOJ)’s unconventional monetary policy has a long history. It started with the introduction of zero-interest rate policy (ZIRP) in February 1999, if we count it as part of the unconventional monetary policy. For all those years since then, Japan has remained in the realm of unconventional monetary policy, except for two periods—from August 2000 through March 2001 and from July 2006 through December 2008—during which the ZIRP was temporarily lifted. Meanwhile, the processes of the BOJ’s unconventional monetary policy have evolved. Specifically, the BOJ embarked on quantitative easing (QE) in March 2001, followed by the launch of comprehensive monetary easing (CME) in October 2010, quantitative and qualitative monetary easing (QQE) in April 2013, QQE with a negative interest rate in January 2016, and QQE with yield curve control in September 2016, all to enhance monetary easing effects.
As mentioned above, the history of the BOJ’s untraditional monetary policy is quite long—that is, longer than that of any other country—resulting in a sufficient accumulation of data for quantitative analysis. As such, assessing the effects of the BOJ’s untraditional monetary policy has been one of my research themes in the past several years. In this article, I would like to draw on recent research findings in focusing on purchases of exchange-traded funds (ETFs), one of a series of untraditional monetary policy measures adopted by the BOJ, to discuss the effects of this scheme and its implications for the future.