The Bank of Japan (BoJ) has unveiled an aggressive plan against deflation, in line with
prime minister Shinzo Abe’s
requirement that the central bank make achieving a 2% inflation target within two years a top political priority.
The BoJ said that it aimed to achieve the new inflation target at “the earliest possible time” and would expand its balance sheet by purchasing longer-term debt and securities such as Exchange Traded Funds (ETFs). Other measures include a merger of its asset purchase programmes and the suspension of a rule prohibiting the purchase of longer-term debt.
The new purchases, which go some way beyond market expectations, will amount to ¥60-70 trillion annually and will double the BoJ’s monetary base over a two-year period. By March 2015, the BoJ aims to double Japan’s monetary base from ¥135 trillion to ¥270 trillion, raising the average remaining maturity of its holdings from three years to seven years.
“We can’t escape deflation with the incremental approach that’s been taken until now,” said the central bank’s new governor Haruhiko Kuroda. “We need to use every means available.”
The US money market fund reforms came into effect in 2016 and are already dramatically shaping US fund industry with investors flooding out of prime funds and into government securities. While the reforms are similar, they are not the same. GTNews interviews Yeng Bulter, global head of the cash business at State Street Global Advisors on the differences.
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On the third day of the Singapore Fintech Festival conference, there was a focus on specific applications of fintech innovation. One was trade finance, which is clearly is ripe for a revolution.
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