BOJ's Paper Loss on Bond Holdings Balloons to Record $71 Billion.

The Bank of Japan (BOJ) has experienced a record-breaking paper loss of ¥10.5 trillion ($70.7 billion) on its bond holdings, the largest loss since fiscal 2004. This poses a challenge for Governor Kazuo Ueda as he considers normalizing policy. The loss is not expected to deter Ueda from reducing stimulus if the bank's inflation goal is achieved, but it highlights the difficulties the central bank may face when it eventually moves towards an exit strategy. The BOJ's massive bond holdings, which make up over half of the central government's outstanding debt, are vulnerable to even a small increase in yields. On the other hand, the BOJ has seen unrealized gains from its holdings of exchange-traded funds, reaching a record ¥23.6 trillion. Despite the losses, Ueda has expressed confidence in the financial situation of central banks, emphasizing the need for responsible financial management to maintain credibility in the markets. [Extracted from the article]