THE BANK OF JAPAN BOUGHT BONDS IN AUGUST — THE MONEY SUPPLY SHRANK 13.8 TRILLION YEN ANYWAY — THE GOVERNMENT’S OWN ACCOUNTS TOOK OUT MORE THAN THE BANK PUT IN
Everyone already had the number. On September 1 the Bank of Japan reported that its money supply was down 15.7 percent from a year earlier. Six days later it published the release that explains the drop, and almost nobody reads that one.
Japan’s money supply fell 13.8 trillion yen in August. The central bank did not do it. It was buying. It bought 2.32 trillion yen of government bonds that month, and even after old bonds were paid off it ended August holding more than it held in July.
The money left through the government’s own accounts. The Bank had 37.3 trillion yen of bonds parked with a government fund under a deal to buy them back later, up from 22.5 trillion at the end of July. Government deposits at the Bank rose another 1.9 trillion. Together that pulled 16.8 trillion yen out of Japanese banks while the central bank was putting money in.
Cash was not the story. Notes in circulation fell 0.11 trillion yen. What drained was the money banks keep at the central bank.
Last August those same accounts ran the other way and released 6 trillion yen, and the money supply barely moved. This is not a summer pattern.
Watch the policy rate and you miss this. The rate gets a press conference. The government’s account gets a two page PDF.
At the time of this writing, bitcoin was $80,263.04 (Crypto.com, 8:32 PM ET, Sep 6). Dollar-yen was 156.12, below its 50-day average of 160.63.
Japan’s money supply fell 13.8 trillion yen in August. The central bank did not do it. It was buying. It bought 2.32 trillion yen of government bonds that month, and even after old bonds were paid off it ended August holding more than it held in July.
The money left through the government’s own accounts. The Bank had 37.3 trillion yen of bonds parked with a government fund under a deal to buy them back later, up from 22.5 trillion at the end of July. Government deposits at the Bank rose another 1.9 trillion. Together that pulled 16.8 trillion yen out of Japanese banks while the central bank was putting money in.
Cash was not the story. Notes in circulation fell 0.11 trillion yen. What drained was the money banks keep at the central bank.
Last August those same accounts ran the other way and released 6 trillion yen, and the money supply barely moved. This is not a summer pattern.
Watch the policy rate and you miss this. The rate gets a press conference. The government’s account gets a two page PDF.
At the time of this writing, bitcoin was $80,263.04 (Crypto.com, 8:32 PM ET, Sep 6). Dollar-yen was 156.12, below its 50-day average of 160.63.
BANK OF JAPAN (PRIMARY) · SUN SEP 6 · 8:32 PM ET · RELEASES DATED SEP 7 JST · + FX.CO SEP 1