The BOJ will exploit foreign assets for green investments



A security guard walks past the headquarters of the Bank of Japan in Tokyo, Japan on January 23, 2019. REUTERS / Issei Kato

  • BOJ says it will push banks to improve climate risk disclosure
  • The BOJ works with the regulator to analyze climate scenarios
  • The plan outlines the stages of non-monetary policy on climate change

TOKYO, July 16 (Reuters) – The Bank of Japan (BOJ) on Friday said it will start buying green bonds using its foreign exchange reserves as part of efforts to promote global investment in activities aimed at fight against climate change.

Japan’s $ 1.4 trillion in foreign exchange reserves is primarily held by the finance ministry, not the BOJ, so the move is likely a symbolic gesture to raise awareness of the need to promote green finance. The BOJ holds around $ 70 billion of these foreign assets.

“The outstanding amount of green bonds in the global market is increasing, a trend that is expected to continue. In view of this situation, the Bank will buy green bonds denominated in foreign currencies issued by governments and other foreign institutions,” he said. -he declares.

This decision comes as other major central banks use their institutional weight to fight climate change.

Last week, the European Central Bank said climate change would be a factor in policy on financial disclosure, risk assessment, guarantees and asset purchases of the corporate sector. Read more

In an overview of non-monetary policy measures to tackle climate risks released on Friday, the BOJ also said it would encourage financial institutions to improve climate risk disclosure.

The BOJ, in conjunction with Japan’s banking regulatory agency, the Financial Services Agency, is working on pilot exercises to conduct a climate risk scenario analysis on large financial institutions, according to the plan.

The central bank, through on-site reviews and off-site monitoring, will discuss with financial institutions their efforts to address climate risks and their engagement with borrowers to pursue carbon neutral activities, a he declared.

“The Bank will actively support financial institutions in identifying and managing their climate-related financial risks, with a view to maintaining the stability of the financial system and the smooth functioning of financial intermediation,” the document said.

The plan was released separately from the BOJ’s monetary policy decision on Friday, which included details of a new program to increase funding for activities aimed at tackling climate change. Read more

Reporting by Leika Kihara and Tetsushi Kajimoto; Editing by Chang-Ran Kim and Sam Holmes

Our standards: Thomson Reuters Trust Principles.


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