The BOJ’s target of increasing the purchase of government bonds The Bank of Japan (BOJ), the Central Bank of Japan, revised its target of purchasing the Japanese government bonds to approximately 7 trillion yen per month.

Source: Bloomberg, 30 May 2013 Think about open market operations by the Bank of Japan:

Suppose the BOJ buys 7 trillion yen of Japanese government bonds from the Bank of Tokyo-Mitsubishi UFJ.

What are the immediate changes in the BOJ’s total assets and total liabilities?

What are the immediate changes in the Bank of Tokyo-Mitsubishi UFJ’s total assets and total liabilities?

What is the change in Japan’s monetary base?

Why is the Bank of Japan undertaking this open market purchase?