IMES DISCUSSION PAPER SERIESBank of Japan’s Balance Sheet in 1882–1955:
Reassembled Data and Their Developments

Ryoji Koike
Discussion Paper No. 2024-E-7

INSTITUTE FOR MONETARY AND ECONOMIC STUDIESBANK OF JAPAN
2-1-1 NIHONBASHI-HONGOKUCHOCHUO-KU, TOKYO 103-8660
JAPAN

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IMES Discussion Paper Series 2024-E-7
August 2024

Bank of Japan’s Balance Sheet in 1882–1955:
Reassembled Data and Their Developments
Ryoji Koike*
Abstract
This paper overviews the developments of the Bank of Japan’s balance sheet from
the Meiji era to postwar reconstruction. The paper assesses balance sheet items interms of both nominal values and ratios to nominal GNP, using semiannual andmonthly data reassembled from historical materials. In the semiannual data, the ratioof total assets to GNP remained at 10–15 percent in peacetime but increased to 19–
48 percent in wartime, whereas it was 16 percent at most during financial crises.
Meanwhile, banknotes remained stable, at 8–11 percent, except in the Bank’s earlyyears and at end of the Pacific War in 1941–45. The monthly data capture short-termchanges during financial crises and rapid changes in economic and financial
institutions, such as the 1923 earthquake, the return to the gold standard in 1930, andthe emergency measures in 1946 that voided old banknotes to reduce money incirculation. These data provide useful information for research in history fields suchas the identification of exogenous shocks.

Keywords: from the Meiji era to postwar reconstruction; the Bank of Japan’sbalance sheet; historical records; semiannual data; monthly data
JEL classification: N25, Y10, E58*Director and Senior Economist, Institute for Monetary and Economic Studies, Bank of Japan(E-mail: ryouji.koike@boj.or.jp)
This paper is an English version of the Bank of Japan IMES Discussion Paper Series 2023-J-4
and the paper in Kinyu kenkyu, July 2023. The author would like to thank Professor Masato
Shizume (Waseda University) and the staff of IMES, Bank of Japan, for their useful comments.
The views expressed in this paper are those of the author and do not necessarily reflect the official
views of the Bank of Japan.

1. Introduction
This paper reassembles the historical balance sheet data of the Bank of Japan (hereafter
the BOJ or the Bank), using various and mostly untouched historical records. The datacontain both total assets and breakdown items, semiannually in 1882–1955 and monthly
in 1897–1955, from the Meiji era to postwar reconstruction.
Earlier studies on the Bank’s balance sheet mainly aim at long-term developments, and,to the author’s knowledge, use annual data. However, the Bank’s balance sheet changed
rapidly in one case, and in another case, a change disappeared in less than a year with onlya small effect on the annual data. A typical example was the financial crisis from March to
May 1927, the so-called Showa financial panic. Semiannual or monthly data more
adequately capture the impact of such events than annual data do. However, semiannual
and monthly data were not available for a super long period, mainly because historical
records usually do not contain such data in a consistent manner.
This paper uses historical materials, such as records at the BOJ Archives and old releasesof Eigyo maishu hokoku (BOJ weekly business report), thereby reassembling the Bank’s
historical balance sheet with total assets and items both in semiannual and monthly terms.
Semiannual and monthly data are available from 1882–1955 and 1897–1955, respectively.
The new data series help to analyze turbulent periods affected by financial crisis or war,and to review changes in the Bank’s balance sheet in terms of both nominal values andratios to GNP.
This paper also divides about 70 years of the Bank’s history into nine periods, and thenreviews changes in the balance sheet items in each period, with the developments ofmonetary, economic, social, and political conditions in that period. The review also covers
developments in the years before the start of BOJ in 1882, such as the developments ofgovernment paper money as well as the government reserve fund, and assesses how thesedevelopments changed after the start of BOJ. We also provide the Bank’s balance sheet
data in a publicly available format.1
The Bank’s balance sheet from 70–140 years ago is not easily comparable with theBank’s current balance sheet, owing to various changes in the Bank’s balance sheet, thecentral banking system, and other economic frameworks, such as the gold standard at thetime. From the Meiji era to postwar reconstruction, large changes in economic conditions
and social disturbances occurred many times. Such changes include the founding of BOJ,
the Sino-Japanese War of 1894–95, the Russo-Japanese War, the return to the gold standard
1

The data file is available on the webpage containing a summary of this paper.

1and the re-departure from it, the financial panic of 1927, the Pacific War of 1941–45, andthe postwar reconstruction. Against such backgrounds, there exist qualitative differences
between the Bank’s balance sheet in 1882–1955 and the balance sheet at present. Still, it
would be worth analyzing the Bank’s historical balance sheet in studying the past impactsof economic and political events. Also, the semiannual and monthly data newly
reassembled in this paper may be helpful for studying the impact of an event at intervals
shorter than one year, thereby possibly enabling the discovery and provision of new
information.
Section 2 reviews major literature related to the Bank’s balance sheet. Section 3 explains
the historical records and data used for reassembling the new data set. Section 4 overviews
the developments of the Bank’s balance sheet and its background over each period from
the Meiji era to postwar reconstruction. It then adds the findings throughout the years andthe differences between the historical and the modern balance sheet. Section 5 provides aconclusion.

2. Earlier Studies
This section reviews earlier studies on the Bank’s balance sheet from three aspects:
studies on the Bank’s modern balance sheet, studies on the Bank’s historical balance sheet,and studies of the Japanese economy in the early Meiji era. In addition, this section
introduces English-language studies about Japan’s financial history.
(1) Studies on the Bank’s modern balance sheet
Among the literature, BOJ Policy Planning Office (2004) comes first. As the organ incharge of policy formulation, the office explains how each balance sheet item will change
in response to the Bank’s transactions with the private sector (such as receipts of treasury
funds, market operations, and loans) and with the government. In addition to these shortterm changes, the study also explains changes in the balance sheet over a longer term, in
response to the economic and financial conditions and the Bank’s policy operations. Next,
Shirakawa (2008) points out that monetary policy measures will change the size of theBank’s balance sheet and item compositions, although it may be difficult to specify acausality for these changes from policy measures. Shiratsuka (2010) also compares
unconventional monetary policies between the BOJ and the U.S. Federal Reserve. He
assesses that the combination of the balance sheet size and the item composition enhances
the overall effects of unconventional policy measures.
In addition, BOJ Monetary Affairs Department (2023) describes the Bank’s balance
sheet and reviews changes over the past 25 years, with an overview of the Bank’s basic2

thinking on central bank finances and monetary policy conduct.
These studies focus on the Bank’s modern balance sheet. It is difficult to objectively
split years into the present time and a historical time. For the sake of convenience, we
consider 1955 as a break, as it marks the end of the postwar reconstruction as well as thestart of high economic growth, and then regard the Bank’s balance sheet from 1882 to 1955
as historical and thereafter as modern.2(2) Studies on the Bank’s historical balance sheet
Among major works of history research related to the Bank, BOJ Centennial Committee(1982, 1983a, 1983b, 1984, 1985, 1986a, 1986b) are monographic works that describe theBank’s centennial history in 1882–1982 with volumes 1–6 and an appendix volume.
Among them, BOJ Centennial Committee (1986b) provides data on the Bank’s total assets
and major items in 1882–1982. 3 Meanwhile, the body text in volumes 1–6 does notdirectly use the balance sheet data.
As another important study, Shizume (2001) historically analyzes the Bank’s balance
sheet to assess the central bank credit to the government, using ratios of total assets anditems to GNP in 1886–2000 and the year-on-year contribution of items in 1928–50. He
also points out the decline of gold in 1930–1940s containing a period of the return to thegold standard, and the prolonged larger holdings of government bonds under the larger
government expenditures in the 1940s. Shizume (2020) also reviews the challenges andinstruments for the Bank’s policy from the late 19th century to the present time, using thethree-period moving average of the year-on-year contributions for the major items. He
points out that the Bank increased credit to the government during various wars, thereby
sharply increasing total assets, and then the Bank was unable to focus on price stability or
economic growth when the government prioritized military buildup. In addition, Fujino
and Teranishi (2000) construct a flow-of-funds table containing long-term data back to the
Meiji era, on the use of various historical materials. They partly discuss the Bank’s balance
sheet in 1882–1940, pointing out the increase in the Bank’s credit to the private sector in
1885–1900 under an upsurge of industries.
As studies covering the historical balance sheets of major central banks, Ferguson,
Miwa and Hara (2007), a work by Japanese economic historians, regard 1945–55 as the postwar
reconstruction period and 1955–84 as the high- to stable-growth period. Nishimura (1994), a work by
the former head and his staff of the Policy Research Institute, Ministry of Finance, also considers 1945–
54 as the reconstruction period and 1955–71 as the high-growth period.
3 Their usage is limited to some items. See BOJ Centennial Committee (1982), pp. 327, 353, 508 (itemsof credit to the private sector and banknotes), BOJ Centennial Committee (1983a), p. 439 (banknotes),
BOJ Centennial Committee (1983b), pp. 179, 207 (credit and banknotes), BOJ Centennial Committee(1984), p. 358 (government bonds), and BOJ Centennial Committee (1985), p. 78 (banknotes).
2

3

Schaab, and Schularick (2015) analyze the central bank balance sheets of 12 industrial
economies, including Japan, in 1900–2012, with respect to total assets, three items on theasset side, and four items on the liability side.4 They point out that the mean and medianof ratios of total assets to GDP usually remained at 10–20 percent. Meanwhile, exceptional
surges occurred in some cases, such as current account surpluses, wars, financial crises
with lending as the last resort, and demand-stabilization policies.
Ferguson, et al. (2023) analyze causality between increases in the size of central bankbalance sheets and financial crises after credit bubbles for 17 industrial economies in 1870–
2020, with an appropriate treatment of endogeneity. In their analysis, geopoliticalemergencies expanded the central bank balance sheet initially, but policy response tofinancial crises became the key driver over time. They also create an instrumental variable
to indicate whether central bank governors in financial crises were hawkish or dovish,using historical materials. According to their empirical analyses, the probability of doves
expanding the balance sheet in response to a financial crisis was 36 percent more likely
than that of hawks, and an economic recovery after a crisis occurs earlier with balance
sheet expansion. At the same time, there is also a trade-off that enhances the probability of
another financial crisis occurring within 20 years. Meanwhile, their research aims at
common trends across central banks in major economies, and their description about the
BOJ is limited. In addition, Nishikawa (1984) reviews the developments and historicalbackgrounds of major central banks, using four items on the asset side (gold, foreign
currencies, credit to the private sector, and credit to the government) and four items on theliability side (banknotes, government deposits, private deposits, and capital).
Earlier studies about the Bank’s balance sheet are extensive. However, annual data usedin the earlier studies are insufficient to capture changes in the balance sheet, such aschanges at intervals of less than one year due to an event, or changes accelerating or
decelerating at a semiannual or monthly frequency. To the author’s knowledge, no studies
review the developments of the Bank’s balance sheet from the Meiji era to postwar
reconstruction using semiannual or monthly data.
(3) Historical Studies on the Japanese economy during the early Meiji era
Historical studies about the early Meiji era are beneficial for overviewing the balance
sheet in the Bank’s early years. The currency system and the economic developments
between the Meiji Restoration and the Bank’s creation in 1882 largely affected the Bank’sSpecifically, the three items on the asset side are foreign currency assets, gold, and government debts,
and the four items on the liability side are foreign currency liabilities, banknotes, bank deposits, andother deposits. Some data are not available due to a lack of historical materials.
44balance sheet at the initial stage.
As historical materials necessary for overviewing the Bank’s balance sheet in the earlyyears, the several Zaiseishi (financial history) series by the Ministry of Finance (hereafterMOF) come first. These series describe the achievements of the Ministry across policy
fields as well as periods, containing large volumes and providing a vast amount of
information. 5 They describe fiscal policy, monetary policy, policy of financial
administration, and currency policy before the creation of the Bank. Next, Okurashoshi(The history of the MOF), in MOF History Office (1998a, 1998b, 1998c), describes theadministration system, policy decisions, and the background from the Meiji era to Showaera, based on the Zaiseishi series. These works are highly informative about circumstances
around the Bank’s balance sheet, even though that is not their main focus.
There are other earlier studies, such as Umemura and Nakamura (1983), which assess
Japan’s economic developments from the late Edo era to the early Meiji era using historicalmaterials. 6 There are also many historical materials, such as MOF annual reports(originally in 1875–97) reprinted in Hayashi (2001a), A chronology of the reserve fund(originally in 1890) in MOF (1932a), and A summary of monetary reform for the gold
standard in 1897 in MOF (1932c) originally released in 1899.
(4) English-language studies on Japan’s financial history
The Japanese version of this paper mostly uses materials in the Japanese-language,
because most materials about the Bank’s balance sheet are in Japanese, and materials in
English are limited. This English version additionally considers two types of studies in the
English-language, despite possible selection basis, to provide a better understanding for
non-Japanese readers.
The first type consists of recent English-language studies about Japan’s financial history.
They include Ericson (2019), Hoshi and Kashyap (2001), Goldsmith (1983), and Patrick
The volumes of Meiji zaiseishi for 1868–1910 placed side-by-side occupy about 0.8 meters in length.
The volumes of Meiji Taisho zaiseishi for 1868–1926 occupy 1.3 meters, and the volumes of the threesets of Showa zaiseishi for 1926–45, 1945–52, and 1952–73 (edited separately) occupy 0.8–0.9 meters.
Clearly, these series contain many pages and much valuable information. Among them, we use Meiji
zaiseishi vol. 1, 3, 9, 11–15 in Meiji zaiseishi hensankai (1904a, 1904b, 1904c, 1905a, 1905b, 1905c,
1905d, 1905e) mainly edited by the then administrative vice-minister of Finance, Showa zaiseishi 1926–
45 vol. 4 and 11 in MOF History Office (1955, 1957), and Showa zaiseishi 1945–52, vol. 19 in MOF
History Office (1978).
6 Asakura and Nishiyama (1974) construct the series of money supply in 1868–1970, a period of about
one hundred years, using a wide range of historical materials. Yamamoto (1994) analyzes the currency
system from the late Edo era to the early Meiji era. There are also other recent works, such as Muroyama(2014), positively assessing Matsukata’s macroeconomic policy, Adachi (2006), emphasizing theimportance of policy regime changes, and Nakamura (2015), reviewing political developments andnarratives of key persons behind Japan’s economic developments.
55

(1967), as well as Reischauer and Craig (1978) about Japan’s general history. English
versions of Japanese studies, such as Tamaki (1995), Nakamura (1994), BOJ Statistics
Department (1966a, 1966b), and MOF History Office (2010), are similar.
The second type consists of older studies in the English language. There are works byJapanese authors, such as Matsukata (1899, 1901), Department of Finance (1890, 1906,
1914, 1940), which was the English name for the MOF in the past, and BOJ (1915, 1923,
1941, 1949, 1950). They describe the economic and financial conditions of their time.
There are also works by U.S. authorities, such as National Monetary Commission (1911),
Bratter (1931) in the U.S. Department of Commerce, and Cohen (1949) in the U.S. forcesin occupied Japan. These studies explain Japan’s financial conditions and institutions of
the time on the basis of overseas recognition.

3. Data and items for reassemblyThis section first explains materials for reassembling data semiannually in 1882–1955
and monthly in 1897–1955, and then explains a method to combine items to create timeseries data covering as long a term as possible.
(1) Semiannual data by the staff of the Bank’s Centennial Committee
BOJ Centennial Committee, the author of the Bank’s Centennial History, provides the
Bank’s balance sheet data from December 1882 to March 1983 on an annual frequency in
BOJ Centennial Committee (1986b). Most studies use this data, for end-December in
1882–1942, end-September in 1943, and end-March from 1944. At the same time, BOJ
Centennial Committee (1986b), p. 307 explains the omission of data ending at the first half
year, owing to a page limitation. After repeated searches over the vast records in the BOJ
Archives, the author found a record where the staff of the Bank’s Centennial Committee
compiled the semiannual data of total assets and major items in 1882–1983.7 Hereafter,
we refer to those staff as the “Centennial staff” and the record as the “Centennial staff
record.” The Centennial staff record contains data for end-June in 1883–1943, and endSeptember in 1944–1982 additionally. The semiannual data match the annual data (oncalendar year or fiscal year) in BOJ Centennial Committee (1986b).

“Nihon ginko taishaku taishohyo (the Bank’s balance sheet)”, in the BOJ Archives “Nihon ginko
hyakunenshi fuzoku toukeihyo saishugenko 1” No. 80901 (hereafter, “No.” after a title indicates areference number of the BOJ Archives linked to a folder containing the record). This material was
created in 1986, the same year of BOJ Centennial Committee (1986b), although it shows no specificyear. There are also other records (“Nihonginko hyakunenshi fuzoku toukeihyo saishugenko 2” No.
80902, “Nihonginko hyakunensi dai 7 kan shiryohen kyuyobi toukeihyo” No. 80878) providing the samedata. These folders are available in the reference list of the BOJ archives from 2013.
7

6

These semiannual data probably come from the Bank’s account settlements reports, likeannual data in BOJ Centennial Committee (1986b). The Bank’s account settlements 8provide more detailed items in some periods than the items of semiannual data by theCentennial staff. For example, the semiannual report at the end of 1910 provides more
items (21 on the asset side and 17 on the liability side)9 than the items (14 on the asset sideand 12 on the liability side) in BOJ Centennial Committee (1986b). Meanwhile, thebalance sheet items were less detailed in some periods. For example, the account settlement
reports in the Pacific War provide only 7 items on the asset side and 7 on the liability side.
Under such circumstances, a simple collection of data from all account settlements from1882 would make items disconnected over years. If we simply connected these data
without combining detailed items into a broader item level, we would have to recalculate
data at detailed items in the 1940s using many and various internal ledgers. This would beprohibitively time consuming. 10 Fortunately, the items in BOJ Centennial Committee(1986b) remain stable even in the Pacific War, because the Centennial staff provide dataon detailed items using internal sources.11 Accordingly, the number of items available ina longer time frame is larger in the semiannual data by the Centennial staff than the datafrom account settlement reports in 1882–1955.12
To review the developments of semiannual data over a longer period, or to compare thedata in different periods, we should adjust the variation of price levels across periods. A
simple method plausible for the adjustment is taking the ratio to GNP, that is, the ratio of
the balance sheet data divided by nominal GNP at the time. However, a series of historical
BOJ Research Department (1956a, 1956b, 1957, 1958) reprint the report on account settlements in
1882–1925. BOJ Research Department (1963, 1978) also reprints the settlement of accounts in 1926–
45 and in 1945–56, respectively.
9 BOJ Research Department (1956b), pp. 222–223.
10 Hirayama (2021), p. 14 quotes the daily data of the Bank’s shareholding, using a ledger of the Bank’shead office in the BOJ archives (“Sokanjo motocho showa 20 nendo 1/2 [The general ledger in 1945
part 1],” No. 21658). However, the data of total assets and breakdown items require huge calculations
over all items in the head office and all branches, using many ledgers and other materials. Under ashortage of materials in 1944–45 and after trials, we regard the recompilation of item data from ledgers
as prohibitive.
11 For example, the item “Bullion” is not available from the account settlements report in 1942 at BOJ
Research Department (1963), p. 877, which uses the item “Cash and bullion.” Meanwhile, BOJ
Centennial Committee (1986b) shows the items “Gold,” “Other bullion” and “Cash” separately, using
internal material from the time. It remains unknown how they disaggregated data during the Pacific War.
12 Semiannual data by the Centennial staff may not be perfect. For example, they keep the detailed level
item “Consigned funds for fractional government paper money” on the liability side, but combine theparallel item “Reserve for fractional government paper money” on the asset side with “Others,” abroader item. We could modify this, like BOJ Research Department (1956b), pp. 631–692, whichdisplays both items discretely, but we use data by the Centennial staff, considering the small room fordata improvement.
8

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nominal GNP from the Meiji era to postwar reconstruction entails two challenges.
One challenge is the annual frequency that is only available in historical GNP series.
During World War I in 1914–19 and the 1940s, high inflation occurred, and the Bank’s
total assets soared semiannually. When comparing these semiannual values, ideally,
nominal GNP should be quarterly data of seasonally adjusted annual rates, based onquarterly GNP data with no adjustment. However, quarterly GNP data was not available
until April–June 1951, and nominal GNP until 1950 is only available at an annual
frequency, either the calendar year or fiscal year. Instead, this paper uses annualized
quarterly rates using a simple method of linear interpolation. Although this method fails toadjust for cyclical factors, the adjusted quarterly data do not appear to cause any criticalproblems in capturing the relative size of the balance sheet for comparison across years.
Please see the appendix for details.
The other challenge is the less precise nature of historical GNP estimates than the
National Accounts at present. To assess the severity of this challenge, we compare ratiosof the Bank’s balance sheet to nominal GNP using two series of historical GNP. The twoseries are mainly from Ohkawa, Takamatsu, and Yamamoto (1974) or Fukao, Nakamura,and Nakabayashi (2017a, 2017b, 2018). In the appendix, we compare the two series andassess that the historical GNP series of Ohkawa, Takamatsu, and Yamamoto (1974) aresufficient to review the variation and trends of the balance sheet. We then use the former
series.
(2) Monthly data of “Bank of Japan Accounts” and “Weekly business reports”
Next, this subsection explains the method used to reassemble monthly data of the Bank’sbalance sheet. Regarding monthly data in 1945–55, total assets and items are available
from “Bank of Japan Accounts” directly. The data of these accounts in 1948–55 iscontained in the Bank’s Honpo keizai tokei (Economic Statistics of Japan), and the data in
1945–47 are available at MOF History Office (1978) on the same basis.13
As monthly data in 1897–1944, the paper uses the value of a mid-month week (or the
week ending on a day between the 11th and 20th of a month) available at “Eigyo maishu
hokoku (Weekly business report)” of the time. This source, occasionally changing its nameslightly to Eigyo shuho (Weekly statement of condition) or a similar name, showed total
assets and major items every week from 1897 to mid-1945.14 However, these values are
Total assets in July and August 1945 are available only in MOF and BOJ (1948), pp. 352–353. The
data for the other months in 1945 are available in MOF History Office (1978), pp. 476–477. The datafrom 1955 are available in the Bank’s statistics periodicals (such as Honpo keizai tokei, Keizai toukei
nenpo and Nihon ginko tokei that all mean Economic Statistics of Japan).
14 “Weekly business report” releases data on the Bank’s total assets and items from January 9, 1897, to
July 21, 1945. For July and August 1945, “Monthly business report” releases the end-month values.
138

on an end-of-week basis and are not identical to values at the end of the month. Among the
4–5 weeks in a month, it is not obvious which week is the best proxy for the month. In thisregard, the contemporary publication of statistics, “Toyo keizai nenkan (Toyo keizai
economic annual)” issued in 1918–44 chooses a mid-week value ending on a month’s 11–
20th day as the monthly reference data in the previous year. Following this manner, weconsider the mid-month weekly value as the monthly representative.15 As the source ofdata ending at a mid-month week, we use Toyo keizai (1918–44) for data in 1917–43, andthe issues of Toyo keizai weekly magazine in 1897–1916 and 1944 when these economic
annals were not available.16
In addition, we also check other historical materials that possibly contain monthly data,such as the Bank’s Honpo keizai tokei (Economic Statistics of Japan) before 1945 andNihon kinyushi shiryo showa hen (Materials on Japanese financial history 1926–45).
“Bank of Japan’s Account” in these materials did not provide total assets up to 1944.17
Despite the author’s repeated search in the BOJ Archives, the author was unable to findrecords containing a historical monthly series of the Bank’s total assets.18

From September 10, 1945, “Bank of Japan Account (Every ten days)” releases values of total assets andmajor items of the Bank’s balance sheet three times a month, on an end-of-ten-days basis.
15 In comparison to values in “Bank of Japan account” on an end-of-month basis, a value of the lateweek ending between the 21st and 31st day of a month might be closer to the end-of-month value. But
we consider the consistency with the contemporary “Toyo keizai” publication to be more important.
16 “Toyo keizai shinpo” issues 2109–2159 (from February 12, 1944 to February 10, 1945) are the sourcefor data in 1944, and issues 43–766 (from January 25, 1897 to January 15, 1917) for data in 1897–1916.
They show total assets and items on an end-of-week basis. When “Toyo keizai shinpo” is insufficient(such as issue 502 from mid-October, 1909), other magazines from the same period are the sources. For
example, “Tokyo keizai zasshi (Tokyo economic magazine)” by Keizai zasshisha, issue 1513 from midOctober 1909, and “Ginko tsushinroku (The bankers’ magazine)” by Tokyo ginko shukaijo, issue 289
from November 15, 1909, are available. In addition, the author compares the sum of items on the asset
side or the liability side with total assets and corrected any obvious errors due to misprints.
17 Up to 1944, the series of “Materials on Japanese financial history 1926–45” provides various
statistics over all 35 volumes, issued by BOJ Research Department. BOJ Research Department (1974)
provides an index for these statistics, such as the name, period, volume, and page of the data concerning
the Bank’s account over the volumes, but the author is unable to find data on total assets. For example,
BOJ Research Department (1964), containing the Bank’s Monthly bulletin, provides major items from
October 1926 to November 1945, but does not provide total assets or complete items on both sides thatwould enable the calculation of total assets.
18 For example, the record at BOJ archives “Kinyu yoryaku 77 (financial summary in the second half1944)” No. 14322, does not contain data on the Bank’s balance sheet every month, even though it
widely contains major financial indicators. Also, the record at BOJ archives “Sokanjo tsukibetu heikin
zandaka ichiranhyo (A summary table of monthly data in the balance sheet items)” No. 49162 contains
data of major items but does not provide total assets or complete items that would enable the calculationof total assets.

9(3) Reassembling semiannual and monthly data across items
Both semiannual and monthly data have advantages. Semiannual data are based on
account settlements, certified by auditors, and arranged consecutively at item level. 19
Monthly data are based on official releases and capture variations over the course of amonth, but may not be consecutive at item level in some periods. In this regard, wereassemble data on item level following a method explained later, so that monthly data
become consecutive for a longer period and we are able to analyze both semiannual andmonthly data simultaneously.
The numbers of semiannual data items in 1882–1955 are 14 on the asset side and 12 on
the liability side (Table 1, left column of each side). Meanwhile, monthly items in 1897–
1955 (Table 2, left column) are less consecutive and cover a shorter period than semiannual
items. Table 2 displays items and years, where each item (left column) of monthly data
emerges, persists, disappears, or joins another item, using horizontal lines and arrows. For
example, by horizontally browsing “Gold coin and bullion” on the asset side (Table 2, left
column, the third row from the top), we find lines and arrows in 1929–41 and 1949–55
indicating the availability of items in these years (and no availability in the other years
shown without lines or arrows). As another example, by browsing the column for 1897
vertically, we find non-blank cells indicating the availability of 10 items on the asset sideand 6 items on the liability side in 1897 (while blank cells indicating no availability).
To obtain more monthly items for as long a time as possible, we should combine several
items, instead of using the items shown in the materials. Table 2 shows that a large
discontinuity occurs mainly in 1944–46. This indicates that if we combine detailed items
into a broader (less detailed) item using this period as a base, we can obtain moreconsecutive data with a wider variety of items in other periods. We consider suchcombinations as a broader item level. The column for 1944–46 in Table 2 indicates that in
1944–46 there are seven monthly items available on the asset side (cash and bullion,
agency account,20 advances to the government, government and other bonds, advances ingeneral, unpaid capital, 21 other assets) and five on the liability side (banknotes,
government deposits, other deposits, other liabilities, capital subscribed). Among these19

For historical materials explaining these items, see Tsuchiya (1956a) for 1882–1900, Tsuchiya(1956b) for 1901–1925, Tsuchiya (1963) for 1926–45, and Tsuchiya (1978) for 1945–1955.
20 “Agency account” contains domestic agencies as well, but until 1946, the account mainly consistsof foreign-currency denominated assets held by Yokohama Specie Bank as the government’s overseas
agency, and we combine the account with “foreign exchange asset.” From 1947, we combine it into theitem “assets to the government” after the closure of Yokohama Specie Bank.
21 When a subscriber paid a partial amount of capital, a firm’s account section booked the unpaid
amount to asset “unpaid capital,” while the account section fully registered the gross amount of nominal
capital to “capital subscribed” on the liability side.

10

items, we combine two items (“advances to the government” and “government and otherbonds”) into “assets to the government,” similar to the composition in Nishikawa (1984).
Then, we add items, “foreign exchange liabilities” (Table 2, the column on the right) anditems at the Bank’s early stage (redemption account for paper money 22 ) discretely.
Consequently, there are seven items available on the asset side (cash and bullion, assets to
the government, assets to the private sector, foreign exchange assets, bank premises etc.,
others, redemption account for paper money) and seven on the liability side (banknotes,
liabilities to the government, liabilities to the private sector, foreign exchange liabilities,
others, net worth, redemption account for paper money). Table 1 displays how we combine
detailed items into a broader item level.23
Both semiannual and monthly data are from the Bank’s balance sheet and should be very
similar. But both types of data on the same month of the same year are not necessarily
identical, owing to the timing of each data series and the use of various materials. 24
Specifically, data until 1944 have different timings (timing at the end of a mid-month weekor the end of a month) and possibly differ in terms of data quality (semiannual data fromthe account settlements or monthly data prior to account settlement).25

4. The Bank’s balance sheet in 1882–1955 and backgrounds
This section overviews the developments of the Bank’s balance sheet, using semiannual
data and monthly data that are reassembled using the method described above. First, we“Redemption account for paper money” is the item for redeeming government paper money andpaper money issued by national banks (see footnote 30 later).
23 These items mainly coincide with the items in Nishikawa (1984), p.4 with additions. Specifically,
they are 4 assets (gold, foreign currency, bills, and government bonds) and 4 liability items (banknotes,
government deposits, private deposits, and net worth) with an additional 3 assets (premises etc.,
redemption account, and others) and 3 liability items (foreign exchange, redemption account, andothers).
24 For example, total assets in 1905–10 surged after the Bank received foreign currency funds from thegovernment and deposited them at Yokohama Specie bank. The semiannual data booked this surge on
the asset side to the item “foreign agency account” (or “foreign exchange asset” at a broader item level).
But monthly data from June 1905 to April 1909 lack this item, and item “advances” (or “assets to theprivate sector”) surged instead. To adjust this, we combine the monthly item “advances” from June 1905
to April 1909 with the item “foreign exchange assets” (and from May 1909 we combine “advances”
with “assets to the private sector” again). See also Table 2.
25 For example, let us consider the data of “banknotes” in December 1925. The value at the end of thesecond half of 1925, or the end of December 1925, is 1.63 billion yen. The value on December 12, thelast day of a mid-December week, is 1.21 billion yen. The value on December 26, the last day of thelate-December week is 1.50 billion yen. The value on the last day of the late-month week is close to thevalue on the last day of the month, as in footnote 15. But the values are not necessarily equal.
Considering consistency with the records at the time, we consider the value of a mid-month week as abetter proxy for monthly data than the value of the late-month week.
22

11

review the balance sheet relative to nominal GNP for about 70 years. Next, we assess thedevelopments of the semiannual and monthly balance sheets across nine periods discretely.
Lastly, we look for common characteristics over the periods and consider the gaps between
the historical balance sheet and the current one.
(1) The Bank’s balance sheet over all periods (to nominal GNP semiannually)
Figure 1 shows the Bank’s balance sheet (total assets and items) relative to GNP
semiannually, with the periods of the Bank’s Centennial History (Figure 1, a–i).26 For thenominal GNP series as a denominator, we mainly use Ohkawa, Takamatsu, and Yamamoto(1974) following major statistics publications, such as Statistics Bureau (1988) and Japan
Statistical Association and Statistics Bureau (2007).
Among the developments in 1882–1955 (Figure 1), total assets remained in the 0–5
percent range at the founding of the Bank in 1882–84, then increased rapidly after thebanknote issuance from 1885, and was at the 10 percent level in the early 1890s. Then,
total assets generally remained in a seemingly settled range except at the end of the Pacific
War and at the peak of the postwar reconstruction. Among the period extending about 70
years, total assets remained in approximately the 10–15 percent range for about 40 years(in 1886–95, 1898–1904, 1912–14, 1925–26, 1929, 1932–40, and 1948–55). We could
consider the 10–15 percent level as the peacetime level of total assets.
The increase in 1896–97 reflects the receipt of indemnity after the Sino-Japanese War(August 1894–April 1895) and the withdrawal by the government. The rise in 1905–10 is
owed to the issuance and refinancing of foreign debt during and after the Russo-Japanese
War (February 1904–September 1905). The high level in 1942–48 is owed to the Pacific
War and the postwar reconstruction, including the peak of 48 percent in September 1945,
although an estimate of nominal GNP in 1945 may be debatable (see the appendix). Total
assets in 1918–24 were also relatively high, at 18–19 percent, reflecting the surge inexternal demand during World War I. Meanwhile, total assets during the Showa financial
panic in 1927 increased mildly, rather than sharply.
The following is the development of each item. On the asset side, “cash and bullion”
moves at 4–8 percent in 1887–1930, declining to 2–4 percent in 1931 under the return to“The Banks’ Centennial History” splits years in 1882–1982 into the following 12 periods (lower caseletters added for convenience): a. until 1882 (before the Bank’s founding), b. 1882–96 (the early period),c. 1897–1913 (adoption of gold standard), d. 1914–19 (World War I), e. 1920–28 (the economy afterWorld War I seeking for the return to gold standard), f. 1928–31 (the return to gold standard under the
global depression), g. 1932–36 (toward a managed float), h. 1936–45 (from Feb. 26 incident to the
Pacific War), i. 1945–52 (the postwar reconstruction), j. 1953–59 (return to ordinary monetary policy),k. 1960–70 (monetary policy in a high growth era), and l. 1971–82 (monetary policy under a free float).
This paper covers the periods in a–i.
26

12the gold standard, then diminishing toward the end of the Pacific War in 1945. “Foreignexchange assets” were at a low level in some years (roughly 1–3 percent in 1885–1904,
and 1925–42) and at a high level in other years (in 1905–10, 1916–22, and 1944–46), witha 15 percent level at the peak. The high levels occurred due to foreign debt issuance, anaccumulative trade surplus, and the temporary financing of wartime expenses in theoverseas territories and occupation areas. 27 “Assets to the government,” including
government bonds, were at a higher level of 5–10 percent in the Meiji era, then at a lower
level of 2–4 percent in 1914–31, and surged in wartime. This item was at a level of 10–14
percent in 1941–49 from the Pacific War to the postwar reconstruction, and at a level of 10
percent or higher in 1896–97 after the Sino-Japanese War. “Assets to the private sector,”mainly “bills discounted” in peacetime, were at a lower level of 1–3 percent. But reflecting
various policy responses, it increased to a higher level of 5 percent in 1927–32, and a levelof 5–20 percent range in 1944–47.
On the liability side, “banknotes” are generally stable, in the 8–12 percent range, except
when they were at a low level at the Bank’s founding and a high level up to about 30
percent near the end of the Pacific War. “Liabilities to the government,” including
government deposits, generally remained at a low level close to zero percent, but
occasionally increased to 7–15 percent, reflecting the higher total assets in wartime andlarger external demands.28 Other liability items remain small both in terms of level andvariation.
Meanwhile, we assess the precision of the ratios to GNP in the balance sheet, by
checking their sensitivity. First, Figure 2(1) shows two ratios of the same total assets todifferent nominal GNPs. The ratio using Ohkawa, Takamatsu, and Yamamoto (1974) is 1
percentage point higher on average than the ratio using Fukao, Nakamura, andNakabayashi (2017a), and 2–3 percentage points higher in some years (in 1886–91, 1906–
07, 1932–35). 29 Figure 3 depicts two GNP series for comparison, where the series inDuring the Pacific War, the Bank temporarily financed government expenditures in overseas
territories and occupation areas that should have been solely financed by the government. See footnote
69 for details.
28 Among the rises on the liability side, the rise in 1896–97 was due to the indemnity after the SinoJapanese War, and the rise in 1905–10 was due to receipts of foreign debt from the Russo-Japanese War.
The rise in 1918–24 was due to the government’s accumulation of foreign currency (booked as foreignexchange assets and government liabilities on the other side) during World War I. The rise in 1945–46
was due to the government deposits associated with wartime expenses. See Tsuchiya (1956a), pp. 73–
76, and Tsuchiya (1956b), pp. 55–58.
29 The discrepancy of 3–5 percentage points between the two ratios in 1946–47 was mainly due to thelinear interpolation of quarterly values from different annual data, either data of fiscal year from
Ohkawa, Takamatsu, and Yamamoto (1974) or calendar year from Fukao, Nakamura, and Nakabayashi(2018), p. 282. However, both use the national accounts, the former using Kokumin shotoku hakusho
27

13

Fukao, Nakamura, and Nakabayashi (2017a) is always high. At the same time, thedifference between the two series in Figure 2(1) may be sufficiently small for assessing thetrends and sizes of the series. Therefore, the paper mainly uses Okawa, Takamatsu, andYamamoto (1974) for analysis.
Next, we compare solid semiannual data with speedy monthly data prior to accountsettlements. Figure 2(2) depicts the ratios of total assets to nominal GNP at monthly andsemiannual frequencies, indicating that the monthly ratio is lower, at 1 percentage point,
on average than the semiannual ratio, and at 2 percentage points in some years (in 1925–
26, 1935–37). This bias may come from the composition of monthly data. The mid-monthweekly data as a proxy for monthly data until 1944 may fail to capture a month-end
increase in banknotes. But the difference between monthly and semiannual ratios to GNP
is small. We assess that both series are sufficient to describe the developments of theBank’s balance sheet.
(2) The Bank’s balance sheet in each period
In the following subsections, we review each period, divided in line with the Bank’s
Centennial History. Considering the economic and financial framework in the early Meiji
era and its effect on the Bank, we also review data before the Bank’s founding, such as
government paper money and national bank notes.
a. Until 1882 (before the Bank’s founding)In 1873–82, government paper money was the primary currency. There were also silver
coins for settling international trade and gold coins legally backing government paper
money. But these specie coins accounted for only about 20 percent of total money issuanceincluding government paper money. The issuance of national bank notes30 was also small
before the amendment of the National Bank Act (August 1876), which made national banknotes inconvertible to specie in reality (Figure 4).31(A white paper on national income), Economic Planning Agency, 1962, and the latter using Nihon keizai
to kokumin shotoku (Japanese economy and national income), Economic Council Agency, 1954.
30 The formal name in Japanese, “kokuritsu ginko shihei,” literally means “national banks’ paper
money,” but the author mainly uses “national bank notes” as it is a plainer term. At the same time, theauthor mainly uses the term “government paper money” after Patrick (1967), pp. 252–257, because“paper money” is easier to understand than “notes,” a term which has multiple meanings.
31 Specifically, there were government paper money (78 million yen), specie (47 million yen),subsidiary coins (13 million yen), domain notes (19 million yen), and national bank notes (1 million
yen) in circulation at the end-1873 (Umemura and Nakamura (1983), p. 32). Before the amendment of
the National Bank Act, national banks were obliged to exchange issued banknotes with specie and toreserve specie equivalent to two-thirds of issued banknotes. After the amendment, their obligation toreserve specie was removed, and they became obliged to reserve government paper money equivalent
to 25 percent of issued national bank notes (BOJ Centennial Committee (1982), pp. 16–31, 56–62).

14

Government paper money was inconvertible in reality and was fiat money based on
government credibility. The first government paper money (dajokan satsu by the Cabinet)
was aimed at loans to promote industries. But half of the issuance was used to financebudget deficits in reality, depreciating the value of paper money to less than the value of
specie (Yamamoto (1994), pp.15–17). Other government paper money was also fiat money,
with a few exceptions.32 There was “the reserve fund33” (a kind of special account) withthe main purpose of making government paper money convertible. However, the reserve
fund did not fully back the convertibility, because the fund had other purposes, such as
buying back government bonds, producing munitions, and promoting industries.
Figures 4 and 5 show the developments of government paper money and national banknotes, and the reserve fund for backing the paper money, respectively. The issuance ofgovernment paper money was for two purposes, money for circulation and money for
temporary financing. The latter purpose was to fulfill a temporary shortage of government
revenue. The government was supposed to soon redeem such paper money from circulation,
but some of it remained in circulation. In 1873–77, the amount of government paper money
for circulation was 65–90 million yen, and the amount for temporary finance was 0–10
million yen. Meanwhile, the reserve fund amounted to 20–40 million yen, and the amountof specie, including gold coins in the reserve funds, was 15–20 million yen, smaller than
the amount of government paper money. The tax system was under reform,34 and policy
measures were too immature to separate between the monetary front and fiscal front.35
The government issued different types of paper money repeatedly and the reliance on fiatmoney for revenue persisted (Umemura and Nakamura (1983), p. 14).
Nevertheless, in 1873–76, one-yen notes of government paper money in circulation weregenerally exchanged for 1-yen silver coins at parity (Figure 6). Against this background,Two exceptions were the treasury notes and the notes of the Hokkaido cultivation commission, bothof which were convertible with gold. But their issuance was small, peaking at 9.3 million yen (14 % ofgovernment paper money) in 1872 and then declining to zero in 1875.
33 The reserve fund began to be accrued in 1869. The initial source was an arbitrage profit. Kaoru Inoue(then working at the Department of Finance) recalled the situation when nibu gold coins worth 100 yen
in nominal evaluation were once worth 107 yen as gold bullion overseas, and the holders of nibu goldcoins in rural areas felt that government paper money was credible. The government took thisopportunity (Sawada (1995) pp. 298–304, 334–340, originally published in 1921).
34 The land tax, which replaced the tribute tax of the former feudal government, was administereddifferently in each region, and the completion of the new land tax reform (in 1873–81) took time (MOF
History Office (1998a), pp. 85–94).
35 The chapters about “government paper money” in the MOF’s annual reports were reprinted in
Hayashi (2001b, 2001c). They contain explanations of that time, such that “paper money” comprises alarge part of government bonds in Hayashi (2001b), p. 24 (covering fiscal 1875–76). The chapter about
government bonds also describes government paper money in Hayashi (2001c), pp. 34–36 (covering
fiscal 1877–78).
32

15

tax was becoming the primary revenue source and generally covered government expenses
from around 1875. These conditions were unlike those in 1868–69, when the issuance ofgovernment paper money was a primary revenue source. The development of the general
government’s revenue and expenditure shows that expenditure increased in 1872–75
because of the succession of the burden on the feudal government, such as stipends for theformer samurai class (Figure 7).36 The expenditure then declined in 1876–77 because thegovernment abolished the consecutive payment of stipends and compensated for it with alump-sum payment of government bonds.37 Among the revenues in 1868–72, tax revenue
was insufficient to cover expenditure, and the revenue from paper money issuance,
government bonds, and government borrowing was also necessary. However, in 1873–75,
the level of tax revenue was becoming the same as that of expenditures, reflecting the
progress of the new land tax reform. 38 In short, the government achieved a balanced
budget by about 1875, as Omori (2001) argues.
However, extraordinary expenditures for suppressing the south-western rebellion surged(March–September 1877), then overall government expenditure exceeded tax revenues,
and revenue from paper money issuance surged again (Figure 4). Accordingly, the trading
rate (for domestic transactions) of one yen in paper money for one yen in silver coinremained stronger for more than three years after the war (Figure 6), as silver appreciatedand paper money depreciated. Domestic prices also surged in 1878–81, as shown by adoubling of the rice price and a 10–30 percent increase in wholesale prices. The economy
grew under the policy of promoting industries, but a trade deficit caused paper money todepreciate and silver coin to appreciate (Figures 6 and 8).
On the monetary front, in 1878–81, the amount of government paper money increasedin early 1878 from about 100 million to 140 million,39 and then slightly decreased to 120
Omori (2001) shows developments of the primary balance (expenditures excluding government bondexpenditures - taxes and other ordinary revenues) in addition to the fiscal balance (expenditures - taxes
and other ordinary revenues) in the early Meiji era, and then reviews the reforms of the time, such as
the commutation of feudal stipends.
37 Government expenditures decreased in 1869 after a complete victory over eastern feudal remnants,
but then largely increased in 1872, mainly due to a start of the hereditary pension stipend for the samurai
and noble classes, as well as debt consolidations for feudal lords and military buildups. To reduce thisburden, the government first asked volunteers to exchange their stipends for voluntarily capitalized
pension bonds in 1874. Then it terminated the remaining stipends as a feudal system and instead gave
all recipients hereditary pension bonds in 1876–77, thereby reducing expenditures instead of allowing
a surge in government debts. General expenditures declined in both 1875–76 and 1877–78, except for
extraordinary expenditures for suppressing the south-western rebellion. But in later years general
expenditures increased again.
38 Muroyama (2004), p. 49 points out that a higher rice price at that time (Figure 6) reduced the tax
burden on farmers, thereby helping them to agree to the new land tax reform.
39 To finance wartime expenses of 42 million yen for suppressing the south-western rebellion, the36

16

million yen in 1879–81 (Figure 4). The reserve fund increased to 50 million yen in mid1878, but the level of specie in the fund remained at around 15 million yen, about 10
percent of the 140 million yen in government paper money (Figure 5). As a backdrop, thegovernment in 1878–81 was under the strong influence of Shigenobu Okuma,40 who had
served for a long time as finance minister. He tried to reduce government paper money incirculation (by reducing issuance and increasing withdrawal) to tame inflation under the
weak paper money and strong silver coin.41 But, under the south-western rebellion andexcess imports with solid economic growth, the inflation and weaker paper money
persisted under declining specie. Under such circumstances, the government establishedthe Bank of Japan in 1882. The Bank was to conduct treasury services, such as receipt ofnational revenues (entrustment of the treasury business), to facilitate monetary circulation
throughout the nation (discount bills and opening correspondence networks), and to fortify
conditions for issuing convertible banknotes after specie accumulation and import
reduction (BOJ Centennial Committee (1983a), pp. 119–140, MOF History Office (1998a),
pp. 183–188, Ericson (2019), pp. 88–111).
b. 1882–96 (the early period)
In 1882–96, the Bank’s balance sheet shows different trends between ratios to GNP andnominal values, such as ratios to GNP levelling off around 1889 and nominal values
increasing owing to inflation (Figure 9). Under such circumstances, ratios to GNP are
better indicators of the balance sheet size. Considering its developments, we divide ratios
to GNP into three subperiods: 1882–84 before banknote issuance, 1885–89 after theissuance and growing total assets, and 1890–96 with stability. The details of subperiods
are as follows.
b-1. 1882–84
Masayoshi Matsukata became the new finance minister after the political upheaval on
October 1881 (the Crisis of 1881).42 In 1882–84, he adopted policies to improve fiscal
government increased paper money issuance and borrowed from the Fifteenth National Bank, whichissued 15 million yen of national bank notes for the loan (BOJ Centennial Committee (1983a), p. 56).
40 Shigenobu Okuma worked as the finance minister from October 1873 to February 1880. He remained
as a senior counselor for finance until October 1881, proposing foreign loans for increasing specie. But
the political crisis of 1881 in October ousted him from the government (Muroyama (2005), pp. 142–
159, MOF History Office (1998b), p.451).
41 The specie at the time was mainly silver, and yen currency was de-facto convertible to silver. From
1878, the exchange rate of paper money to silver became volatile, under speculative trades for the
weaker paper money and stronger silver (MOF History Office (1998a), p.132).
42 Okuma proposed a policy to enhance specie reserves by foreign loan issuance in May 1880. However,other political issues (preparation for the constitution, movement for the parliament, and fire sale ofgovernment properties in Hokkaido, a northern district) sharpened the disagreement within the17balance (such as tax increases and military expenditure reduction 43 ) and trade balance(export promotions of silk, tea, and surplus rice for emergencies as well as import
restraints), for accumulating specie reserves using foreign bills of exchanges in exports.44
Despite improvements of trade balances and a slowdown of high inflation, government
paper money remained weak against silver coin, and the government was unable to issue
convertible banknotes (Figures 6 and 8). The government then recognized that if the Bank
were to issue convertible banknotes at this timing, banknotes would never be in circulation
because people would rapidly exchange these banknotes for either silver coin for hoarding
or for government money for payment.
The Bank’s balance sheet, before the banknotes issuance, had limited amounts of credit
to the government and private sector (such as bond purchases and discount bills), and theratio of total assets to GNP was less than 5 percent. Among the items, the redemption
account for paper money was large, reflecting the government’s entrustment of redeeming
national bank notes to the Bank from 1883. Specifically, the Bank received the funds ingovernment paper money and national bank notes from the national banks, and it booked
them to the liability item (redemption account). Then, using the funds, the Bank purchased
government bonds and booked them to the asset item (redemption account), to redeem
them gradually with the bond interests and the contributions from national banks. 45
However, compared to the amount of about 30 million yen in 1885 as the issuance ofnational bank notes, the size of the redemption account was just 8 million yen, indicatinga slow pace of redemption at about 0.4 million yen semiannual and 8 million yen for ten
years (Figure 10).46
government and caused the Crisis of 1881. Other leaders dismissed Okuma from the government.
Matsukata then rejected Okuma’s plan for foreign debt issuance, preferring independence from foreign
capital.
43 As a friend of military leaders from the same province (Satsuma) as himself, Matsukata considered
the importance of enhancing armaments. Meanwhile, he also partly restrained military expenditures andpromoted retrenchments for redeeming government paper money, considering that an imperfectredemption would make the military enhancement unsustainable (Muroyama (2005), pp. 161–220).
44 In the framework using foreign bills of exchange, exporters were to receive loans from thegovernment funds in paper money and to repay in specie. MOF History Office (1998a), pp. 175–178.
45 The government revised the National Bank Act in May 1883, allowing national banks to continue
their banking business on the expiration of charters (twenty years) as joint-stock ordinary banks withoutnote-issue privileges, and deciding to redeem all national bank notes by their expiration. This revision
derived functions of issuing bank notes to solely concentrate on the Bank of Japan (BOJ Centennial
Committee (1983a), p.295).
46 Regarding the redemption of national bank notes by the Bank of Japan, see BOJ Centennial
Committee (1983a), pp. 295–304, BOJ Centennial Committee (1983b), pp. 11–14, Tsuchiya (1956a),
pp. 33–34, Meiji zaiseishi hensankai (1905c), pp. 502–517. Meiji zaiseishi hensankai (1904a, 1904c,
1905a, 1905b, 1905c, 1905d, 1905e) also describe details about the redemption of government paper
money and national bank notes.

18

b-2. 1885–89
In 1885, trade deficits disappeared, specie reserve increased, and a decrease ofgovernment paper money in circulation helped to bring its value to be on par with silver,
thereby improving the situation for the Bank to issue convertible banknotes. The Bank
started to issue Bank of Japan notes in May 1885 and then exchanged government paper
money for silver coins from January 1886. Among the requests to the Bank for exchanging
government paper money, fortunately, only 10 percent of the requests demanded silver
coins, and 90 percent accepted an exchange with Bank of Japan notes, which were bothhandy and silver convertible.47 The Bank exchanged government paper money for silver
coins (in the reserve fund) accumulated by the government.48 The Bank kept silver coinsas the specie reserve, and the government erased the withdrawn paper money (MOF
History Office (1998b), pp. 179–180). In 1885–89, both the redemption of government
paper money and issuance of Bank of Japan notes progressed steadily (Figure 4).
Under such circumstances, on the liability side, the ratio of banknotes to GNP increased
to 7 percent by December 1888, and liabilities to the government (treasury funds) also
increased due to the entrustment of treasury transactions (Figure 9).49 On the asset side,
cash and bullion (government paper money, specie), assets to the government (bonds), andassets to the private sector (discount bills) increased.
b-3. 1890–96
The government paper money issued was about 50 million yen in March 1889,
significantly decreasing from the peak but considerably higher than the 16 million yen of
the specie reserve (Figures 4 and 5). Then, in 1890, the government established the Special
Account for the entire redemption of paper money, thereby merging the reserve funds withthis account. The government received 22 million yen in a no-interest loan for paper money
redemption, and in return, the government permitted the Bank to issue convertible banknotes within a limit of 85 million yen (MOF History Office (1998a), p. 180, BOJ
As the background to smooth exchange, MOF History Office (1998a), p. 179 indicates three points:
the rate of paper money on par with silver coin, the handy usage of paper currency accepted by the
public, and the government credibility restored.
48 To receive the collected government paper money for exchange, the government gave the Bank
mostly government bonds in fiscal 1884, half silver coins and half government bonds in fiscal 1885,
and mostly silver coins in fiscal 1886, according to the MOF annual reports printed in Hayashi (2001d),
p. 71, and Hayashi (2001e), p. 89. From 1894, the government gave Bank of Japan notes to the Bank,in exchange for the collected government paper money (Hayashi (2001f), pp. 140–144).
49 In 1886–90, as the entrusted agent of the treasury, the Bank receive treasury funds and recorded themas government deposits on the liability side. Later in 1890–1922, the treasury funds were separated fromthe Bank’s balance sheet, reflecting the alteration of the framework, such that the Bank managed thetreasury funds under a separate account. BOJ Centennial Committee (1982), pp. 269–272, BOJ
Centennial Committee (1986b), p. 275.
47

19

Centennial Committee (1982), pp. 316–324).
As a result, the withdrawal of government paper money in exchange for Bank of Japan
notes progressed further. Both the amount of specie reserve and its ratio to the total of
paper money were on an uptrend (Figure 10), reflecting this withdrawal and exchange.
Meanwhile, the time was not ripe for stopping the use of government paper money quickly,
in light of the specie reserve in 1890–94. An acceleration of the withdrawal of government
paper money would have possibly caused a rapid decline in specie reserve, thereby limiting
banknote issuance. 50 In 1895, however, the government was to receive the Chinese
indemnity after the Sino-Japanese War. This helped the government to prepare for the gold
standard (effective from January 1897). Accordingly, with the new law promulgated inJune 1898, the government was able to cease the entire circulation of government paper
money by the end of 1899 (BOJ Centennial Committee (1983a), p. 13). Meanwhile, theredemption of national bank notes was at a slower pace, and the remaining issuance was
26 million yen at the beginning of 1890 and 16 million yen at the end of 1896, at the initialdeadline of the business term with the privilege of banknote issuance (Figure 10). Then,after the law of the settlement of national banks on the expiration of their business term
was promulgated in March 1896, the government was able to ask the Bank to provide
noninterest-bearing loans to national banks that had fallen behind in redeeming their notes.
Under the law, the task of redeeming national bank notes ended in 1899 (BOJ Centennial
Committee (1983a), pp. 11–14).51
In this period, on the liability side, the ratio of banknotes to GNP increased from 7 to 10
percent or higher, and liabilities to the government decreased due to a change in thetreasury system. On the asset side, assets to the government increased and cash and bullion
decreased (by withdrawal of government paper money).
In 1896, temporary but significant developments occurred. The reception of indemnity
after the Sino-Japanese War sharply increased the ratio of total assets to GNP to 27 percent
or 450 million yen in nominal values. Among the items, cash and bullion and assets to thegovernment mainly increased on the asset side, and liabilities to the government increasedon the liability side. Assets to the government consisted of deposits of government funds
at the Yokohama Specie Bank (Tsuchiya (1956a), p. 54). Meanwhile, the redemption
Specifically, compared to the amount of specie reserve in 1893 (100 million yen, Figure 10), the sumof government paper money and national bank notes was considerable (40 million yen), where nationalbank notes were convertible to government paper money after the revised national bank regulation. It
appears that the government avoided the risk of a sharp increase for requesting specie by hurrying towithdraw the remaining government paper money and national bank notes in circulation.
51 The balance of redemption account became zero after the Bank’s loans to national banks wereentirely repaid in 1905.
50

20

account largely declined in 1896–97 as the redemption of national bank notes proceeded.
c. 1897–1913 (from the gold standard to before World War I)
Monthly data become available from 1897, and we should assess the Bank’s balance
sheet with both semiannual and monthly data (Figure 11). Considering the developmentsof total assets, we split the period into two subperiods, 1897–1904 and 1905–13.
c-1. 1897–1904
After the aforementioned increase in 1896, the ratio of total assets to GNP in 1901
declined to 11 percent or 260 million yen in nominal values, reflecting the government’s
withdrawal of funds for military buildups and industrial promotions (MOF History Office(1998a), pp. 317–321). Among the items, the ratio of banknotes to GNP declined from 11
percent to 8 percent while the nominal GNP was increasing with inflation. Cash and bullion
also declined from a peak in 1897. 52 Meanwhile, assets to the private sector (mainly
discount bills) remained at a high level in 1900 (3–4 percent ratio to GNP or 70–100 millionyen), but started to decline in 1901 and remained low after that.
Next, monthly data show the developments at shorter intervals, such as the financial
panic of spring 1898 and the banking panic of spring 1901.53 In the financial panic of 1898,
assets to the private sector and liabilities to the government increased for five months andthen returned to the original level, but banknotes remained relatively stable with noindication of sharp deposit withdrawals. Meanwhile, during the banking panic of spring
1901, monthly data in the Bank’s balance sheet show a decline of assets to the private
sector, an increase of assets to the government, and a decline of banknotes at the same time.
This reflects the instability of the financial system and policy response. It was difficult tograsp these developments occurring in a shorter interval with the conventional annual data.
c-2. 1905–13
For the Russo-Japanese War in February 1904–September 1905, the government issued
foreign debts to finance wartime expenditures. In the Bank’s balance sheet, items offoreign exchange assets and liabilities to the government increased, and the ratio of total
assets to GNP increased to 26 percent (or 900 million yen) in 1905–07, mainly reflecting
the Bank’s business services to the government. Total assets then declined in 1908–09 due
Demands for funds were strong in promoting modern industries and military buildups. A tendencyof trade deficit occurred again after the adoption of the gold standard.
53 In the financial panic of spring 1898, exports of cotton yarn to China (under the silver standard)stagnated after Japan’s adoption of the gold standard, thereby causing failures of firms and banks (BOJ
Centennial Committee (1983a) pp. 86–96). In the banking panic of spring 1901, suspension of payment
in south-western Kumamoto prefecture sprawled in the south-western, western, central, and eastern
districts of Kyushu, Kansai, Chubu, and Kanto (BOJ Centennial Committee (1983a), pp. 128–137).
52

21

to the fund transfer from the Bank to the government’s revenues, and their ratio to GNP
increased again in 1910 to 22 percent (or 9 million yen) owing to the foreign debt
refinances at maturity.54 Then, total assets declined to about 13 percent (700 million yen)
but remained higher than those before the Russo-Japanese War, reflecting the foreign debt
issuance and the overseas specie held by the government and the Bank (BOJ Centennial
Committee (1983a), pp.168–171). Among the items, foreign exchange assets and liabilities
to the government largely fluctuated due to the War, but banknotes remained stable, witha ratio to GNP at the 8–10 percent level, despite the uptrend in nominal value. On the asset
side, cash and bullion in the asset item also remained stable, at a ratio to GNP of 4–6
percent.55
Next, the developments of monthly data clarify the monthly timing of foreign debt
issuance for war finance in 1905, and the repetition of debt issuance and fund receipt
several times in that year. In February–May 1907, a small banking panic occurred andbanknotes declined slightly. Also in March 1907, foreign exchange assets and liabilities to
the government largely increased again after foreign debts were refinanced with a lower
rate, and then declined again after the funds were transferred to the government revenue(MOF History Office (1998a), p. 459). Also, in October 1907–May 1908, banknotes
declined but assets to the private sector increased, indicating the Bank’s efforts to minimize
contagion after the U.S. financial panic of 1907. Monthly data capture these developments(BOJ Centennial Committee (1983a), pp. 223–224, 232–238).
d. 1914–19 (World War I)
In this period, the Bank’s balance sheet shows different trends between ratios to GNP
and nominal values, and we should describe each development separately.
The ratio of total assets to GNP in 1914–19 increased from 13 to 19 percent under the
uptrend of trade surplus during World War I (Figure 12). Among the items, foreignexchange assets (deposits at the government’s overseas agency) increased from 5 to 8
percent under such trade surplus. Liabilities to the government increased consistently.56
The increase of total assets in 1910 was mainly in foreign exchange assets (deposits to the YokohamaSpecie Bank as the overseas agency) as well as liabilities to the government (foreign currency discountbills) after the refinance of foreign debts (BOJ Research Department (1958), pp. 147–154). This would
reflect the Bank’s business services, in terms of treasury funds and foreign exchange, to the government.
55 In 1911–13, trade deficit persisted despite the sluggish economy, possibly reducing the amount ofspecie necessary for maintaining the gold standard. The fear of currency crisis gradually strengthened(BOJ Centennial Committee (1983a), pp. 249–252, 278–283).
56 In addition, a mild increase of assets to the private sector in 1919 reflected the start of a rediscountof banker’s acceptance by the Bank for smooth financing of industries, which expanded during the war,
although strict screening reduced applications (BOJ Centennial Committee (1983a), pp. 487–503, 521–
529).
54

22

Banknotes also increased from 7 to 10 percent, indicating a higher growth of banknotes
than nominal GNP.
Nominal values also increased at a pace faster than ratios to GNP. In terms of nominal
value, total assets became 4 to 5 times as large (from 0.6 billion yen to a range of 2.4–3.0
billion yen57) and banknotes became 3 to 4 times as large (from 0.4 million yen to 1.1–1.6
billion yen) under high inflation. Nominal GNP also became 3.3 times as large in 1914–19(from 4.7 billion to 15.5 billion yen), affecting the Bank’s balance sheet. The larger
increase in banknotes than in nominal GNP caused the higher ratio of banknotes to nominal
GNP under the economic expansion of this period.
Monthly data also show that the growth of total assets accelerated in mid-1917. The
United States entered World War I in April 1917, and the war’s escalation probably affected
Japan’s economy with a lag. From mid-1918, the Bank’s balance sheet expanded further
in banknotes, and liabilities and assets to the government, under the supply shortage andstrong demand with no slack, symbolized by the rice riots from July 1918.58
e. From 1920 to June 1928 (sluggish economy after World War I)
After World War I, the economy was sluggish and the inflationary nominal values
leveled off. Ratios of GNP and nominal values of the Bank’s balance sheet both show asimilar trend, and monthly data capture the changes that may be obscure in semiannual
data.
In 1920–28, total assets were fluctuating downward, under the gradual disappearance ofthe trade surplus that had occurred previously. The ratio of the Bank’s total assets to GNP
declined from 18 to 15 percent, and 2.8 billion to 2.5 billion yen in nominal values (Figure13). Then, during the financial panic of 1927 in March–May, total assets increased in termsof both the ratio to GNP and yen value. Among the items, the ratio of foreign exchange
assets to GNP largely declined from 7 to 2 percent in 1920–28, or from 1.1 billion to 0.3
billion yen, because of a smaller trade surplus. Meanwhile, the ratio of assets to the private
sector to GNP increased from 2 to 5 percent, or from 0.4 billion to 0.8 billion yen, reflecting
the Great Kanto earthquake (September 1st, 1923) and the financial panic of 1927. Still,
the development of banknotes remained stable, with ratios to GNP in the 9–10 percent
range or the 1.3–1.7 billion yen range, aside from short-term effects from the earthquake
We show the range instead of a value, considering the large difference between the end-June value(2.4 billion yen) and the end-December value (3.0 billion yen). Hereafter, the same applies.
58 In mid-1918, the government considered economic growth as the top priority and was reluctant totighten monetary conditions to tame inflation. The government was also cautious about a sharp drop in
foreign demand after the armistice of World War I in November 1918 (BOJ Centennial Committee(1983a), pp. 429–449).
57

23

and the financial panic.
Monthly data capture the changes in 1920–28 that are obscure in semiannual data. In
1920–28, in addition to the earthquake of 1923 and the financial panic of 1927, the banking
panic of 1922 (in October–December 1922) occurred.59 We confirm the developments ofthese events with monthly data. First, in the financial panic of 1927 in March–May,banknotes soared from 1.1 billion to 1.6 billion yen, a 45 percent increase in two months,
and then rapidly went back to the previous level after June. At the same time, assets to theprivate sector increased in line with banknotes stably at a high level after June 1927. Theyshow that banknotes returned to the Bank within a short period, while the elevated level ofthe Bank’s assets to the private sector indicates the greater credits to households and firms
from private-sector banks, originally from the Bank. In this period, liabilities to the private
sector (current deposits from private-sector banks) also partly increased.60
In the banking panic of 1922, banknotes also surged from 1.1 billion to 1.35 billion yen
from October to December, a 22 percent growth in two months, and then declined in
January 1923. Compared to the panics in the Meiji era with stable banknotes in monthly
data, this may imply a considerable change in the developments of banknotes during afinancial panic. In addition, after the earthquake in September 1923, banknotes surged
from 1.14 billion yen to 1.36 billion yen, a 19 percent growth in one month from August
to September 1923. In this case, banknotes after the earthquake took a longer time to returnto the previous level in March 1924 than banknotes after the financial panic did.
Assets to the private sector surged in the same way during the above three events, but
the length of time differed largely among the three events. Among the surges of assets tothe private sector, the length of time after the banking panic of 1922 was as short as about
one month, but the length after the earthquake of 1923 was about 18 months, and the length
after the panic of 1927 was ten years. Semiannual data also capture the surge after the panicor the earthquake but fail to capture changes every month. Monthly data should be
beneficial to capture these short-term changes in the Bank’s balance sheet with moregranularity. Furthermore, a proper recognition of a shock and its length should be aprerequisite in analyzing a shock and the length of the effect by a shock after the event,and in assessing whether the effect may either disappear shortly or remain long. They are
BOJ Centennial Committee (1983b), pp. 29–37, 48–102, 169–263 describes each event. In addition,
BOJ Centennial Committee (1983b), pp. 3–9 also refers to an event in March–May 1920 as a panic
reaction. However, it appears that the impact was limited, considering the less volatile monthly data as
well as the shorter description.
60 The extraordinary session of the Diet on May 1927 authorized the Bank to make special advances(BOJ Centennial Committee (1983b), p. 181). Accordingly, the Bank’s current deposits from privatesector banks increased (BOJ Research Department (1963), p. 467).
5924

also necessary in assessing how the shock may affect the Bank’s assets to private-sectorbanks and ultimately their credit to firms. Monthly data, enabling the capture of such ashort-term shock properly, should be beneficial for research.
f. From July 1928 to 1931 (stagnation after the gold standard restored)
From July 1928 to 1931, the great depression in the United States and Europe spilledover to Japan. Under the restored gold standard, Japan experienced a severe depression(the Showa depression of 1930–31). The Bank’s total assets declined (Figure 3 and the “f”
part of Figure 14), and a severe deflation caused different trends between ratios to GNP
and nominal values. We should describe the developments of each trend separately.
The ratio of total assets to GNP in 1928–31 remained at the 15–16 percent level. The
items also remained stable in general, and for example, banknotes remained in a narrow
range of about 10 percent within small seasonal fluctuations. Meanwhile, cash and bullion
declined sharply from 7 to 4 percent in September–December 1931, from the suspensionof the gold standard by the United Kingdom to the suspension by Japan. The Bank’s assets
to the private sector and assets to the government also increased, indicating the Bank’s
credit provision as a policy response to the external shock.61
However, total assets in 1928–31 declined from 2.4 billion to 2.0 billion yen, about a 20
percent decrease. Banknotes declined under the depression. Cash and bullion barely
remained at a level of 0.9 billion yen from the beginning of 1930 to mid-1931 upon the
return to the gold standard. However, from September 1931, when the United Kingdom
left the gold standard, cash and bullion rapidly declined over three months, halving to about
0.5 billion yen in December 1931. Monthly data enables us to capture these developmentswith more granularity.
g. From 1932 to February 1936 (Takahashi’s macroeconomic policy)
The “g” part in Figure 14 corresponds to the period of the expansionary macroeconomic
policy package under Finance Minister Korekiyo Takahashi. The policy package consistsof the managed currency system with an embargo on gold exports, fiscal policy with theBank’s purchase of government bonds, and monetary policy with lower interest rates.62
BOJ Centennial Committee (1983b), pp. 485–517, BOJ Centennial Committee (1984), p. 96, BOJ
Research Department (1963), pp. 570–575 denotes the circumstances of the time. In September–
December 1931, the active purchases of specie mainly by the Yokohama Specie Bank for settling
imports caused a shortage of yen currency and tightened its demand-supply condition including otherprivate-sector banks. In response, the Bank increased credit to other banks through collateralized loans
with government bonds and discount bills.
62 Among the studies in Kinyu kenkyu issued by the Bank’s Institute for Monetary and Economic
Studies, Shima (1983), Shizume (2001), Ide (2001), and BOJ IMES (2001) mainly discuss Takahashi’s
macroeconomic policy. These studies assess the policy positively as a precursor of Keynesian policy
61

25

They caused obvious changes in the Bank’s balance sheet. In a transition from severe
deflation to inflation, nominal GNP growth was higher than the growth of the Bank’s total
assets, causing the developments of the Bank’s balance sheet to differ between nominal
values and ratios to GNP.
Total assets in terms of nominal value increased from about 2 billion to 2.5 billion yen
in 1932–35, mainly reflecting an increase of assets to the government from 0.3 billion to
0.9 billion yen underwritten by the Bank. On the liability side, banknotes also increased
consistently. Meanwhile, the ratio of total assets to GNP declined slightly. The Bank’sbalance sheet in terms of nominal values plainly increased under the expansionary
macroeconomic policies, but this increase was cancelled out in terms of ratios to GNP
under the progress of inflation. Among the items, assets to the private sector and banknoteson the liability side were on a downtrend in terms of the ratio to GNP.
Monthly data in this period show little obvious changes, as in other periods. A small
exception was the tendency of banknotes to begin swinging upward in December.
h. From March 1936 to August 1945 (from the Feb. 26 incident to the Pacific War)
Under the wartime regime, the Bank’s balance sheet shows conspicuous developments.
Total assets increased about fivefold during the seven-year period of 1936–43, andespecially skyrocketed threefold during the one-year period of 1944–45 (Figure 15). 63
Apart from the inflation effect, the ratio of total assets to GNP remained on a sharp uptrend,
from 12 percent in 1936–39 to 17 percent in 1943, 25 percent in 1944, 33 percent in March
1945, and 48 percent in September 1945.64, 65
On the liability side, banknotes mostly caused the increase of the total in both nominal
values and ratios to GNP, as well as liabilities to the government during the Pacific War.
Banknotes were stable, in the 9–11 percent range, in 1936–39, gradually began to increasein 1940–43, and then surged to a very high level in a very short time. Banknotes reachedand negatively as a trigger to the postwar spiral inflation under fiscal deficit expansion, although theextent of pros and cons in each paper differ. Regarding the transmission mechanism of Takahashi’s
policy package, Shibamoto and Shizume (2014) analyze the dynamics of policy shifts, using structural
VAR model and monthly data, such as output, prices, exchange rate, and money.
63 Total assets in terms of nominal value increased in 1936–43 from 2.2 billion to 11.1 billion yen (eachJune), and increased in 1944–45 from 18.9 billion to 57.6 billion yen (each September). The uptrend ofquarterly interpolation of nominal GNP in the time (Figure 3) was 3.5 times as large in 1936–43 (17.7
billion to 62.5 billion yen, each second quarter), and 1.6 times as large in 1944–45 (from 76.1 billion to120.6 billion yen, each third quarter).
64 It should be noted that nominal GNP in 1945 may contain a range of measurement error, owing to
the effects of incomplete price surveys in wartime and the early postwar reconstruction.
65 Cash and bullion in nominal value showed changes in 1937–38 (an increase by the revaluation ofgold and a decline after transferring the increment to foreign exchange asset) more clearly than the same
item in terms of ratios to GNP. BOJ Research Department (1963) pp. 702–744.

26

the 16–18 percent range in 1944 with the severe war situation and tighter controls for
expanding munition productions, and surged to the 21–34 percent range in 1945 with fullscale air attacks paralyzing Japan’s domestic transportation.66, 67
On the asset side, assets to the government and assets to the private sector largely
increased. In terms of ratios to GNP, assets to the government surged from 5 percent to 13
percent in 1936–44, due to the purchase of government bonds to finance wartime
expenditures. Assets to the private sector increased in 1942–43 from the start of the PacificWar, and then surged in 1944–45 to the 15 percent level in March 1945, to satisfy thefinancial necessities of munitions companies.68 Foreign exchange assets also surged to 8
percent in 1945, reflecting temporary finance for the occupied areas (unsettled overseas
balance in “agency account”).69 Cash and bullion swung upward in mid-1937 and thendeclined.70
Monthly data capture the geometric increases in total assets and banknotes with moregranularity. For example, for both total assets and banknotes, the growth accelerated after
the start of the War with China in July 1937 without a formal declaration. Monthly data in
1940–45 also show the accelerating tempo of growth, as the situation worsened upon thestart of the Pacific War (December 1941), the withdrawal from Guadalcanal (February1943) as a symbol of the defeat afterward, the tighter control for larger munition
As the background to the skyrocketing banknotes, the large-scale air attacks all over Japan in 1945
were an influential factor, in addition to the spread of military expenditures nationwide. The issue ofweekly Toyo keizai magazine on July 18, 1945, reported a decline of deposits in large cities under thenationwide air attacks and a surge of cash outlays by the evacuees from cities. Some of the Bank’s
branches opened in the wartime for the smooth circulation of banknotes.
67 Banknotes in nominal value increased fivefold during the seven-year period of 1936–43 (from 1.5
billion to 7.4 billion yen, each June), and increased threefold during the one-year period of 1944–45(from 13.7 billion to 41.4 billion yen, each September), far greater than nominal GNP did.
68 The Munitions Companies Act (October 1943) institutionally obliged large banks (such as majorbanks and the Wartime Finance Bank) to lend to munitions firms swiftly with simple procedures as anecessity. The Bank also helped these large banks by lending to them directly and by arranging their
syndicate loan to munitions firms (BOJ Centennial Committee (1984) pp. 305–310, 355–359).
69 In the Pacific War, the huge amount of wartime paper money (military scrip and puppet bank notes)
circulated in the occupied areas. People undervalued these types of paper money relative to Bank ofJapan notes. (For example, 1 yen in Bank of Japan notes was actually exchanged for 100 yen in paper
money in the occupied area, although 1 yen in such paper money was formally on par with Bank ofJapan notes in the government budget.) In such case, the government nominally incurred a gap between
the budgetary and actual expenditures by borrowing from the Overseas Fund Bank, which wasestablished by the government in early 1945, or borrowing from Yokohama Specie Bank before that.
See MOF History Office (1998b), pp. 250–257, MOF History Office (1955), pp. 367–386, MOF and
BOJ (1948) p. 352, BOJ Centennial Committee (1984), p. 412. For their settlements after the war, seefootnote 73.
70 The Bank revalued gold on August 1937 (BOJ Centennial Committee (1984), pp. 212–215, 375–
376).
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27

productions (in 1943–44),71 and the more intense air attacks over Japan proper (from early
1945 to the surrender).
i. From September 1945 to 1952 (the postwar reconstruction)
From September 1945 to 1952, we mainly assess the development of the Bank’s balance
sheet in terms of ratios to GNP, because the nominal value under the rampant postwar
inflation (“i” part of Figure 16) is difficult to assess.72
The ratio of total assets to GNP rapidly declined in 1945–52, from 48 percent in
September 1945 to 20 percent in September 1946, and to 17 percent in September 1947
with fluctuations. In 1948–52, total assets were stable, at 10 percent. Banknotes dropped
from 34 percent in September 1945 to 10 percent in March 1946, after the emergency
measures in February 1946, which voided old banknotes to reduce money in circulation.
Specifically, the government and the Bank collected old banknotes in circulation todeposits of private-sector banks, and then froze these deposits by imposing withdrawal
limits in new banknotes to reduce money in circulation, thereby containing high inflation.
However, banknotes soon bounced back and soared to 18 percent in March 1947, under
the strong money demand and high inflation. As the postwar reconstruction progressed in
1948–52, banknotes declined to a peacetime level of 8 percent in 1952.
On the asset side, foreign exchange assets dropped to about zero in September 1945–
September 1946, after the item was settled as a government obligation.73 Assets to theprivate sector declined from 20 percent to 3 percent in March 1947 under the normalizationof credits for military productions. Assets to the government also dropped to 3 percent but
turned to an increase in 1947 among stronger demand for postwar reconstruction and thenremained at a high level. Foreign exchange assets increased to a 2–3 percent level in 1950–
52, to arrange the foreign exchange loan system74 toward smoother imports after Japanregained sovereignty.
Assets to the private sector in 1943 increased in January–December but declined shortly in April–
June. This may have been due to the government policy of promoting larger military production while
quickly containing the oversupply of banknotes by promoting settlements with securities only, without
cash, around June 1943 (MOF History Office (1998b), pp. 286–292, MOF History Office (1957), pp.
375–378). The worsening war situation overturned the short-term decline.
72 Japan’s inflation in 1945–48 surged by a factor of several tens—the most severe increase since the
Meiji era (Figure 8(2))—and nominal GNP in 1945–48 also surged by a factor of about 50 (Figure 3).
Meanwhile, the Bank’s total assets increased by a factor of about 10.
73 After the surrender, the government settled the overseas balance in “agency account” as its own
obligation and the amount disappeared from the Bank’s balance sheet (MOF and BOJ (1948), p. 352).
74 Foreign exchange assets and liabilities to the government increased in September 1951 to prepare
the system that would enable the Bank to loan to private-sector banks in charge of foreign currencytransactions.
7128

In terms of nominal values, the outstanding developments are as follows. Banknotes
surged from 30 billion yen to 300 billion yen in 1945–48, increasing tenfold, then leveled
off from 1949 to spring 1950 under the retrenchment policy (as given later), and turned to
an increase again in 1950 after the outbreak of the Korean War.75 It was in 1953 whenbanknotes leveled off again. On the asset side, foreign exchange assets sharply declined in
1946, remained almost zero until 1950, and then increased in 1951. Assets to thegovernment increased in 1945–49 and then slightly decreased in 1949–52. Assets to theprivate sector remained on an uptrend under the postwar reconstruction and the unexpecteddemand during the Korean War.
Monthly data capture the developments at a higher frequency. For example, banknotes
surged from 41.4 billion yen in September 1945 to 58.6 billion yen in January 1946, andthen declined, reaching 23.3 billion yen in March under the emergency measures voiding
old banknotes. However, banknotes in April increased again and reached 355.3 billion yen
at the end of 1948. Against the persistent inflation, the Supreme Commander of AlliedPowers, dominated by the United States, decided to invite Joseph Dodge as a minister, andrequested the government of occupied Japan to formulate retrenchment policy measuresconsistent with the Nine-point Economic Stabilization Principle.76 Monthly data showedthat banknotes leveled off from January 1949, in the early phase of the Dodge plan.
In addition, we briefly review the developments in 1953–55, a period of adjustment fromthe regaining of sovereignty to the Jinmu boom (from end-1954 to mid-1957).77 Total
assets and banknotes remained low, at a ratio to GNP of 10 percent or 7–8 percent,respectively. On the asset side, assets to the government increased, while assets to theprivate sector, such as discount bills, declined.78 In terms of nominal value, total assets in
1953–55 were on an uptrend in the range of 0.7–0.9 trillion yen, and banknotes were in therange of 0.5–0.7 trillion yen.
(3) Findings throughout the years
This subsection assesses the findings throughout the years, with the developments of theBank’s total assets and items in 1882–1955, as reviewed above in semiannual data (ratios
to GNP and nominal values) and monthly data (nominal value).
First, the Bank’s ratio of total assets to GNP increased in wartime, including World War
After the outbreak of the Korean War in June 1950, truce negotiations starting in July 1951 resulted
in the armistice agreement in July 1953.
76 BOJ Centennial Committee (1985), pp. 212–215, MOF History Office (1998c), p. 57.
77 We briefly review 1953–55, considering both the periodization of the BOJ Centennial History(footnote 26) and this paper’s coverage of 1882–1955 (Section 2(2) and footnote 2).
78 BOJ Research Department (1978), pp. 32–54.
75

29

I, which increased Japan’s external demand. The ratio of total assets to GNP surged to 27,
26, 19, or 48 percent, in the Sino-Japanese War of 1894–95, the Russo-Japanese War of
1904–05, World War I, and the Pacific War, respectively. The peak of total assets in thesewars was obviously higher than the 10–15 percent in peacetime. The upswing remained
for two years after the Sino-Japanese War, and about 5–10 years after the other wartime
periods. This point is consistent with Ferguson, Schaab, and Schularick (2015) andFerguson et al. (2023), assessing wars and current account surplus as factors that raised
central banks’ total assets. Meanwhile, compared with their consideration of financial
crises as another factor, the effects of financial crises in 1882–1955 on total assets wererelatively small in Japan. The surge in the Bank’s total assets during the financial panic of
1927 was 16 percent at most, a level slightly higher than the peacetime level. Among theitems, assets to the private sector remained elevated for about 10 years, but the increase
was 2 percentage points at most, smaller than the increase in wartime.
Second, the ratio of banknotes to GNP remained stable, at 8–11 percent, except at theBank’s beginning in 1885–89, the time from the Pacific War to the beginning of postwar
reconstruction in 1942–47, and the temporary fluctuation during the financial panic of1927.79 The ratio of banknotes to GNP remained stable in most of the wartime (the SinoJapanese War, the Russo-Japanese War, World War I, the War with China in 1937–45),
except the Pacific War.80
The new monthly data captured the changes of every month meticulously, such as atemporary surge of banknotes in March–May 1927 during the financial panic of that year.
The new data also enables us to identify which events among the financial and banking
crises affected the Bank’s assets to the private sector, how strong such effects were, and,how long such effects remained. The new data also captured the geometric surge of total
assets in 1937–45, how and when items among total assets mainly contributed to the surge,
consistently with historical events (such as the strengthened munition productions under
the worsening in 1943–44 and the more intense air attacks in 1945). The monthly data also
Banknotes remained stable, at 12 percent, in the first half of the Pacific War (in 1941–43).
For stable banknotes in 1897–1943, “a backstop for an unsustainable increase in domestic demand”
might be a common factor. In 1885–1931, the gold (or de facto silver) standard adjusted domestic
demand through external balances. In 1932–36, Finance Minister Takahashi prevented an excessive
expansion of military expenditures (Shizume (2009), p. 246, Shizume (2021), p. 100). In 1937–43, thegovernment adopted the Materials Mobilization Plan, or the so-called budget of materials, allocatingsteel and other strategic materials to mainly military use and the rest to civilians, and making the military
recognize the upper limit of resources (Kaya (1976), pp. 96–100). But from 1944 to August 1945, themilitary was unable to stop the war, demanding an irrational mobilization plan containing an allocationof steel by scrapping equipment and allocating food at a starvation level (Yamasaki (2016), pp. 492,
794).
79
80

30

clearly showed that the emergency measures with new banknotes in February 1946 taken
to control the surge in banknotes failed after only two months, resulting in a more rapid
surge in 1946–48.
(4) Differences between the Bank’s historical and modern balance sheets
Lastly, we consider the differences between the Bank’s historical balance sheet and themodern balance sheet. In general, a central bank’s total assets and item composition maylargely vary in different economic or institutional conditions. For convenience, we divided
the period of 1955–2019 at 1995 (1955–95 mainly from the high growth period to the
bubble burst, and 1995–2019 from the bubble burst to the current time). We then comparethem with the period from the Meiji era to postwar reconstruction, as assessed before(Figure 17(1)).
First, in 1955–95, the Bank’s ratio of total assets to GDP was stable, in the 8–10 percent
range, close to the peacetime range in 1882–1955. On the liability side, banknotes
remained stable, at 7 percent. On the asset side, each item fluctuated discretely, reflecting
policy or various other factors.81 In other words, we may consider this development thatbanknotes on the liability side mainly determined the size of total assets, and items on theasset side changed against various factors across different periods accordingly. In addition,
contrary to the development of nominal GNP in 1882–1955, nominal GDP in 1955–95 was
mostly increasing. This uptrend of GDP, together with a stable ratio of the Bank’s total
assets to GDP, indicates that the nominal growth of the Bank’s balance sheet was consistent
with the economic growth in the same period (Figure 17(2)).
Next, in 1995–2019, the ratio of total assets to GDP rapidly increased from 10 percent
to 100 percent (Figure 17(1)). In this period, as pointed out by Shiratsuka (2019), asset
purchases on the assets side mainly determined the size of total assets, instead of thedevelopments on the liability side. On the asset side in 1995–2019, assets to thegovernment were generally on an uptrend (except 2006–11) under several instances ofmonetary easing.82 Assets in the form of purchases with a resale agreement and advances
In 1955–70, assets to the private sector were high under the strong demand for funds in the highgrowth period. In 1971–82, foreign exchange assets and assets to the government increased. After the
U.S. declaration of terminating dollar convertibility for gold (“Nixon shock” in August 1971) and thefirst oil crisis from October 1973, economic growth weakened, and the issuance of government bonds
increased. In 1983–95, assets to the private sector increased and then declined under the progress offinancial deregulation, the emergence of the bubble economy, and the bubble burst. BOJ Centennial
Committee (1985), pp. 552–595, BOJ Centennial Committee (1986a), pp. 74–114, and Shizume (2020),
pp. 940–947.
82 Specifically, they are the zero interest rate policy (from February 1999 to August 2000), quantitativeeasing policy (from March 2001 to March 2006), comprehensive easing policy (from October 2010),
quantitative and qualitative easing (QQE, from April 2013), and QQE with yield curve control (from8131

against government debts as collateral increased in 2000–2004, whereas assets in the formof trust property, asset-backed securities, and equity trust funds increased in 2013–19. On
the liability side, banknotes increased from 8 percent in 1995 to 14 percent in 2005, andthen increased to 19 percent in 2019, the highest level since the early Meiji era except for
the end of the Pacific War. In line with the asset side, liabilities to the private sector (suchas current deposits) surged from 1 percent in 1995 to 12 percent in 2005, and then to 72
percent in 2019, an outstanding level historically.83
The Bank’s balance sheet after 1955 is out of the scope of analysis, but we may be able
to summarize the above characteristics of the balance sheet after 1955 as follows:(i) In 1882–1955, total assets largely fluctuated mainly in wartimes, while banknotes
remained stable.
(ii) In 1955–1995, both total assets and banknotes remained stable, under the highgrowth period, the bubble economy, and its burst.
(iii) In 1995–2019, total assets expanded rapidly, mainly due to the items on the asset
side, under the repeated monetary easing and asset purchases.84
For comparing data from different periods using super-long times series, we shouldcarefully confirm the institutional background to each period, such as the developments ofa central bank or a nation’s other systems on the monetary, financial, or economic front.
There are huge differences between each period in monetary and economic conditions,
economic structures, frameworks and goals of policy authorities, and their concerns overbusiness operations.85 Another crucial point is data availability, which is necessary forsuch analyses. Reassembled historical data, from historical materials forgotten in the
public domain and in archives, should be beneficial for the economic analysis at present,
through an enlarged feasibility of an historical overview from such data.

September 2016). Nakaso (2017) overviews the evolution of these policy measures. Also in 1995, theBank started a monetary policy with a target for the overnight call rate, and then short-term market
interest rates declined below the official discount rate (Amamiya (2017), BOJ Research and Statistics
Department (1996), p. 11).
83 These annual values are the annual average of the monthly ratio (Figure 17(1), ratio of monthly value
to nominal GDP, quarterly annual rate, seasonally adjusted).
84 Banknotes on the liability side expand under a zero interest rate, but the analysis of mutual feedback
between the asset side and the liability side is out of scope in this paper. Such analysis would require a
macroeconomic model containing private-sector banks and firms, which is beyond the scope of thispaper focusing on the Bank’s historical balance sheet.
85 Kuroda (2005), pp. 1–3 assesses Japan’s fiscal and monetary policies in 1967–2003, and argues theimportance of institutional memory from experiences over different generations and the difficulty ofconsistently assessing several periods from a time-independent viewpoint.

32

5. Conclusion
This paper newly reassembled data of the Bank’s balance sheet at semiannual (1882–
1955) and monthly (1897–1955) frequencies, from various historical materials. The paper
then overviewed the developments of total assets and items of the Bank’s balance sheet
from the Meiji era to the postwar reconstruction, as well as the developments of thegovernment paper money and the reserve funds before the founding of the Bank. The
analyses showed characteristics common to several periods over the Bank’s balance sheet,and the previously unseen short-term changes. The ratio of total assets to GNP remained
at 10–15 percent in peacetime but increased to 19–48 percent in wartime. The ratio of total
assets in financial crises increased to 16 percent at most, a lower level than the ratio in
wartime. Among the items, banknotes remained stable, at 8–11 percent, except in the
Bank’s early years and at the end of the Pacific War. The new monthly data enabled us tocapture the short-term changes in financial crises and rapid changes in economic andfinancial institutions, using items such as banknotes, assets to the government, and assets
to the private sector.
This paper reassembled the Bank’s balance sheet for about 70 years with semiannual
and monthly data. This enabled us to assess the effect of an event on the balance sheet
quantitatively, for events such as changes in institutional frameworks, in policies and ineconomic or political conditions both in Japan and abroad. Quantitative assessment isbeneficial for considering frameworks and policies by central banks at present. The paper
also confirmed the usefulness of the approach of reassembling forgotten data into a higher
frequency and then assessing data together with qualitative information from historicalmaterials.

33

Appendix: Nominal GNP in this paper
This appendix explains two technical aspects about nominal GNP: an interpolation ofquarterly annualized rates using a linear trend, and two series of nominal GNP.
(1) An interpolation of quarterly annualized rates using a linear trend
An estimation of nominal GNP in quarterly annualized rates with seasonal adjustments
requires too many assumptions. As a second best, this paper simply uses a linear trend tointerpolate quarterly annualized rates in the current year if both the previous and next year
values show the direction of the current year’s annualized rates. Specifically, we assume
the following (a) and (b):(a) The average of the quarterly annualized rates is equal to the annual value.
(b) The direction of the trend (up or down) is the same for annual and quarterly values.
Then, we interpolate quarterly annualized rates (seasonally non-adjusted), following thenext step (c) or (d).
(c) If the current year value becomes either a peak or a trough relative to both theprevious and next year values, we assume the quarterly annualized rates of the current year
as horizontally equal to the current year value. For example, if the previous, current, andnext year values are 90, 100, and 95, respectively, we assume the values of the first, second,
third, and fourth quarter, or Q1, Q2, Q3 and Q4 (hereafter the same), as all equal to 100.
(d) If the previous, current, and next year values have the same trend (up or down in two
consecutive years), we assume the quarterly annualized rates in the current year as a linear
trend with a slope following either substep (d-1) or (d-2) below.
(d-1) We assume a slope over 4 quarterly rates as equal to an annualized slope between
the previous and next year, and then interpolate such quarterly rates. For example, if theprevious, current, and next year values are 83.3, 100, and 120, respectively, we interpolate
Q1 as 92.5, Q2 as 97.5, Q3 as 102.5, and Q4 as 107.5, such that quarterly annualized ratesof the current year linearly increase 5 percent quarter-on-quarter and have an average of
100.86(d-2) If the quarterly rates by step (d-1) cause inconsistency with assumption (b) among
the previous, current, and next year values, we assume that a slope over 4 quarterly rates
will be less steep. Specifically, such slope should be the less steep value of either a slope

In this case, we allocate the annual change of 20 percent (quarterly 5 percent) to each quarter
according to the distance from the middle of the year. For example, considering that the center of Q4
comes 1.5 quarters after the middle of the year, we set the Q4 value as 107.5, a 7.5 percent increase (=5% times 1.5 quarters) from 100 at the mid-year value. Similarly, we set the Q3 value as 102.5 because
it comes 0.5 quarter after the middle of the year.
86

34

between the previous and current year, or a slope between the current and next year. For
example, suppose the previous, current, and next year values are 95.2, 100, and 135,
respectively. In this example, the annualized slope between the previous and next year is
20 percent. If we would interpolate quarterly rates of the current year using this slope, thensuch quarterly rates would cause inconsistency with assumption (b), because the current
year Q1 would become lower than the previous year Q4 and the current year value washigher than the previous year value. 87 In this case, we assume the slope between theprevious and current year (5 percent increase), and then interpolate Q1 as 98.125, Q2 as
99.375, Q3 as 100.625, and Q4 as 101.875 as the current year’s annualized rates, which
increase 1.25 percent quarter-on-quarter and have an average of 100.
Following the assumptions and steps from (a) to (d), quarterly interpolation using annual
data of historical nominal GNP (Figure 3, black bar marker) gives quarterly data (Figure
3, white square marker). Among them, Table A-1 show excerpts of annual and quarterly
data in 1913–18 and 1942–48 with calculation under step (d-1) and (d-2). Quarterly data
in 1915 and 1944–46 are interpolated using (d-2), because (d-1) causes inconsistency (forexample, annual 1914 is lower than annual 1915 but 1914 Q4 is higher than 1915 Q1).
Table A-1
Year

1913

Quarter
5.01

Year

1942

Q4

Q1

Q4

63.8

1916

Q4

Q1

4.99

4.74

1943
Q1

55.8

1915

4.74
4.74

Quarter
Annual (bil. yen)
Quarterlyinterpolation
using (d-1)
(d-2)

1914
Q1

Annual (bil. yen)
Quarterlyinterpolation
using (d-1)(d-2)

Quarterly interpolation
Q1

5.09

5.43

6.87

7.34

9.84

4.73
4.89

5.25
5.09

5.43

6.87

7.34

9.84

Q4

1945
Q1

74.5

Q4

114.5

1918

Q4

8.59

4.89

1944
Q1

Q4

6.15

1917

Fiscal 1946

11.8

Fiscal 1947

1948

’46/1-3 ’46/4-6 ’47/1-3 ’47/4-6 ’48/1-3
474.0

1309.02666.059.7 67.9 69.8 79.2 96.0 132.9 223.4 313.8 634.2 635.7 1982.3
59.7 67.9 65.0 84.0 49.1 179.8
69.8 79.2 96.0 132.9

50.7 897.3 635.7 1982.3
313.8 634.2

Note: Quarterly data in 1945 and in fiscal 1946 are interpolations using a slope over 5 quarters. January–
March quarter of 1946 is a linear interpolation. Underlined quarterly values in the rows of (d-1), (d-2)
indicate usage for quarterly interpolation.

The following is a formulaic explanation of the above assumptions and steps, instead ofa numerical example. The assumptions (a) and (b) correspond to equations (A-1) and (A2), respectively, where nominal GNP in year t is 𝑦𝑡 , and its quarterly annualized rate onquarter q is 𝑦𝑡,𝑞 , 𝑞 = 1, ⋯ ,4.
Here, the current year Q1 (92.5) following step (d-1) declines from the previous year Q4 (above95.2), and the current year value (100) increases from the previous year value (95.2).
87

35

(𝑦𝑡,1 + 𝑦𝑡,2 + 𝑦𝑡,3 + 𝑦𝑡,4 )/4 = 𝑦𝑡 .

(A-1)

(𝑦𝑡+1 − 𝑦𝑡 )(𝑦𝑡+1,1 − 𝑦𝑡,4 ) > 0 and (𝑦𝑡 − 𝑦𝑡−1 )(𝑦𝑡,1 − 𝑦𝑡−1,4 ) > 0.

(A-2)

Step (c) corresponds to equation (A-3).
(𝑦𝑡+1 − 𝑦𝑡 )(𝑦𝑡 − 𝑦𝑡−1 ) < 0(A-3)→ 𝑦𝑡,1 = ⋯ = 𝑦𝑡,4 = 𝑦𝑡 .

Step (d) corresponds to equation (A-4).88(𝑦𝑡+1 − 𝑦𝑡 )(𝑦𝑡 − 𝑦𝑡−1 ) > 0→ 𝑦𝑡,1 = (1 − 1.5 × 𝑏⁄4)𝑦𝑡 , 𝑦𝑡,2 = (1 − 0.5 × 𝑏⁄4)𝑦𝑡 ,(A-4)

𝑦𝑡,3 = (1 + 0.5 × 𝑏⁄4)𝑦𝑡 , 𝑦𝑡,4 = (1 + 1.5 × 𝑏⁄4)𝑦𝑡 .

Step (d-1) corresponds to a case where the calculation of (A-4) using slope b from (A-5)
satisfies (A-2).
(A-5)

𝑏 = √(𝑦𝑡+1 /𝑦𝑡−1 ) − 1.

Meanwhile, for some 𝑦𝑡−1 , 𝑦𝑡 , 𝑦𝑡+1 , the calculation of (A-4) using slope b from (A-5)
may not satisfy (A-2). In this case, we use (A–6) to calculate (A-4), following step (d-2).
𝑏 = (𝑦𝑡 /𝑦𝑡−1 − 1) if |𝑦𝑡 /𝑦𝑡−1 − 1| < |𝑦𝑡+1 /𝑦𝑡 − 1| ,(A-6)

𝑏 = (𝑦𝑡+1 /𝑦𝑡 − 1) if |𝑦𝑡+1 /𝑦𝑡 − 1| < |𝑦𝑡 /𝑦𝑡−1 − 1| .

(2) Two series of historical nominal GNP.
This paper primarily uses estimates from Ohkawa, Takamatsu, and Yamamoto (1974) asan orthodox choice. Many studies use their historical GNP. At the same time, we consider
an alternative series in light of criticisms about the precision of historical GNP.
As the orthodox series of historical nominal GNP, we use Ohkawa, Takamatsu, andYamamoto (1974) for data in 1885–1951 (although data are not available in 1945 and areavailable only for the fiscal year in 1946–51). Data in 1875–84 are estimates on a
production basis by Yamada (1957). Statistics Bureau (1988) and Japan Statistical
Association and Statistics Bureau (2007) show both series as historical GNP. Nominal GNP
in 1945 is the estimate (114.5 billion yen) from Saito (2021), pp. 43–44. 89 The 1945
In (d), considering that the center of Q1 comes before 1.5 quarter from the center of the year, we set
the Q1 value as the yearly value minus a change of 1.5 quarter (b is yearly, b/4 is quarterly slope).
Similarly, we set Q2 as a yearly value minus a change of 0.5 quarter, Q3 as a yearly value plus 0.5
quarter, and Q4 as a yearly value plus 1.5 quarter, respectively.
89 Gross Nominal Expenditure (GNE) in 1945 is estimated from real GNE in 1944 (from Economic
Planning Agency or EPA), the estimate of real economic growth in 1945, and the estimate of GNE
deflator in 1945 (using GNE deflator in 1944, 1946, and WPI in 1944–46), as shown below:
88

𝐸𝑃𝐴
𝑁𝐺𝑁𝐸𝐸𝑠𝑡1945 = 𝑅𝐺𝑁𝐸1944 ×

𝑅𝐺𝐷𝑃𝐸𝑠𝑡1945
𝑅𝐺𝐷𝑃𝐸𝑠𝑡1944

𝐺𝑁𝐸,𝐸𝑠𝑡× 𝑃1945

𝐺𝑁𝐸,𝐸𝑠𝑡, 𝑃1945

𝑃𝐺𝑁𝐸

𝑃𝐺𝑁𝐸

𝑃1944

𝑃1946

1944
1946
1
= 𝑃𝑊𝑃𝐼
1945 × 2 ( 𝑊𝑃𝐼 + 𝑊𝑃𝐼 )The estimate is 114.5 billion yen (≈ 20.113 billion yen  (5608/7394)  3.50  1/2  (3.70/2.32 +43.7/16.27).

36

estimate uses wholesale price index (WPI) and real GDP for 1945 with an assumption that
GNP deflators for 1944 and 1946 are proportional to WPI.
An alternative series of nominal GNP in 1874 and 1885–1951 are from Fukao,
Nakamura, and Nakabayashi (2017a, 2017b, 2018). For data in 1874 and 1885–1913,
Fukao, Nakamura, and Nakabayashi (2017a) consider Japan’s economic developments
before 1868 (proto industrialization) with the data appendix. Their nominal GNP estimates
are higher than those in Ohkawa, Takamatsu, and Yamamoto (1974). Data in 1914–44 arefrom Fukao, Nakamura, and Nakabayashi (2017b) and data in 1946–54 are from Fukao,
Nakamura, and Nakabayashi (2018). Data in 1945 is not available in Fukao, Nakamura,and Nakabayashi (2017a, 2017b, 2018) so we use Saito (2021) again.90
For an alternative series in 1875–84, we adopt the maximum value of each year among
available estimates, such as Teranishi (1982), p. 617, Fujino (1994), p. 99, Muroyama(2014), p. 184, and Yamada (1957), to consider measurement errors as much as possible.
Figure A-1 shows these estimates. Fukao, Nakamura, and Nakabayashi (black square
marker) are higher than Ohkawa, Takamatsu, and Yamamoto (white square). Fujino (black
circle), Teranishi (black triangle), and Muroyama (cross sign) are close to Fukao,
Nakamura, and Nakabayashi.
Figure A-1
1.3
1.2
1.1
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0

Various estimates of nominal GNP in 1874–90

Bil. yen

YamadaFujinoMuroyama
Orthodox

Ohkawa et al.
Teranishi
Fukao et al.
Alternative

1874 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90

Figure 3 shows annual data of the orthodox series (black horizontal bar marker), theirquarterly annualized rates (solid black line with white square), and data of the alternative
series (gray horizontal bar). The alternative series is generally 10 percent higher than theorthodox series, 30 percent higher in 1877–83, and 20 percent higher in 1884–87.

If WPI in 1944–46 (2.32 in 1944, 3.50 in 1945, 16.27 in 1946, footnote 89 and in Saito (2021), p.
40) were more adjustable in consideration of household outlays with black market transactions (Koike(2020), figure 12), then an alternative nominal GNP in 1945 would be higher. However, no ratio ofhousehold outlays to nominal GNP or other basic data in 1945 is available. Thus, we use the same value
from Saito (2021), p. 44 as nominal GNP in 1945 for the alternative series.
90

37

Figures and Tables
Table 1

Semiannual items of the Bank’s balance sheet and aggregation across items

Asset side
Items

Liability side
Combined to

BullionCash andbullionCash
Treasury and government funds
Advances to the government
Assets to thegovernment
Deposits
Agency accounts (from 1947)
Securitiesof which: treasury bills, government
Assets to thebonds, yen-denominated bonds, etgovernmental.
Foreign currency denominatedbonds

Advances to the private sectorof which: Advances on fixed term,advances on current accounts, bills
Assets to thediscounted, bills discounted of law
private sector#55 or #56 of 1927, loans on bill,
special loans on bill
Foreignexchange
assetsLoans for national banknote
redemption

Redemption
account for
paper money

Overseas assets accountAgency accounts (up to 1946)
National banknotes redemption
account

Combined toNotes issued

Banknotes

Treasury and government fundsof which: deposits for treasury,
deposits for government bond,deposits for railroad bond, funds
for mint certificate, funds for
Liabilities tospecie exchange, funds forthepurchase bullion, funds for credit
government
to Korean government, consigned
money, consigned funds for
fractional paper money

Foreignexchange
assetsLoans in foreign exchange et al.

Items

Foreignexchange
assetsRedemption
account for
paper money

Bank premises
Bank premisesetc.
Account for unpaid capitalDue from other banks
Other assets(Initial prepaid expenses, expenses
for convertible notes, expenses for Others
banknote production, advances forinterbank remittances, guaranty
endorsement, advances for overseas
credit, etc.)

Funds for paper money redemption

Redemption
accounts forpaper money

Government deposits

Liabilities tothegovernment

Private deposits

Liabilities tothe private
sectorOther deposits (overseas related)such as deposits for overseas
credit received, deposits foroverseas exchange settlement

Foreignexchangeliabilities

Accounts for national bank noteredemption

Redemption
account for
paper money

Due to other banks

OthersOther liabilitiesof which: remittances outstanding,demonetized banknotes
outstanding, acceptance &Othersguarantee, receipt for overseas
credit, etc.
Gold-silver adjustment account,funds for gold-silver revaluation,
funds for contributor
Current earnings
Reserve for expenditures
CapitalSurpluses

Net worth

Net worth

Note: We omit the item names appearing only after 1955. Items at a detailed level in the primary source arelimited, and the sum of data of detailed items may differ from the sum of data at a broader item level.
Source: BOJ Centennial Committee (1986b) pp. 272–307.

38

Table 2Monthly items, transition across time, and aggregation in this paper

Assets side
Items
Cash and bullion
Gold coin and bullion
Other cash
Advances for foreign exchange
Funds for foreign exchange
Agency account (to 1946)

1897 1900 05
10
15
20
25
30
35
40
45
50
Combined to────────────────────────────────┐┌───────┐Cash and├───────────┤├─────
➔bullion└───────────┘└─────
➔─────────────────────────────────────────────♦─────➔ Foreignexchange───assets◊◊◊◊◊ ─────────────────────────────────────

Advances to the government,─────────────────────────────────────────banknote act
Provisonal delivery to the government─────────────

Advances to the government
Goverment and other bonds
Funds for fractional paper money…………──────…─…────…………………─────………──────────────────────────➔ Assets to the──────────────────────────────────────────────────────────➔ government──────────────────────Special cash on government accountAgency account (from 1947)
Bills discounted
Advances
Advances in general──────────────────♦────────────────────────────────────────────┐────────□□□□□ ───────────────────────────────┤

Assets to┣─────
➔the private└■──────┛Advances for interbank remittances

Bank Premises
Unpaid capital
Other assets
Due from other banks
Items in transit────────➔┏─────
➔──────
➔sector────────────────────────────────♦──────────────────────♦Bank───────────────➔ premises, etc.
■───────────■─────────────➔Others────────────────────────────────┤───────────────────┘Liability side
Items
Capital subscribed
Surpluses
Reserves
Banknotes issued
Government deposits
Government current deposits
Govenrment other deposits
Funds for fractional paper money

Sinking funds

Due to the government for loan
issued1897 1900 05
10
15
20
25
30
35
40
45
50
Combined to──────────────────────────────────────────────────────────➔────────────────────────────────────────────┘├─────
➔ Net worth└─────
➔──────────────────────────────────────────────────────────➔ Banknotes─────────────────────────────────┐┌────────────➔├───────────┤Liabilities tothegovernment└───────────┤─────────────────────────┘───────────────
─…────…────────────────────────────────────────────────────────────┐Other deposits
Liabilities to├─────
Financial Instituton deposits➔ the private├─────
Deposits for interbank remittance➔ sector
Other deposits (for overseas credit)

Overseas account
Other liabilities
Due to other banks
Items in transit└─────
➔─

Foreignexchangeliabilities┏─────────────────────────➔────────────────────────────────┫Others──────────────────┛

Notes: Each item name is the representative one in the Bank’s weekly report, for brevity.
Each cell with an arrow or solid line depicts data availability, where the row and column of a cell means
the item and the year of data available. Ellipsis (...) or a blank cell means partial or no availability,
respectively. Angled and crossing lines denote an item combination within the group. Black squares andblack diamonds denote a surviving and merged item, respectively, in an item combination across the groups.
For example, “advances for foreign exchange” was combined with “advances in general” in May 1942.
White squares and diamonds denote a temporary combination from mainly domestic “Advances” to“Agency Accounts.” In 1905, after receiving government funds from foreign debt issuance, the Bank
booked the deposits at Yokohama Specie Bank as “Advances” because the Bank did not have the item
“Agency account.” We combine this surge with the item “Advances” from June 1905 to April 1909.

39

Figure 1

The Bank’s balance sheet in 1882–1955, semiannual data to nominal GNP

Ratio to GNP, percent
b
40 a
35
30

c

d

e

f

g

h

Redemption account

OthersTo government

To private sector

Foreign exchangeBank premises etc.

Cash and bullion

Total assets

48%

iAsset side

25
20
15
10
5
0
1880
0

85

90

95

1900

05

10

15

20

25

30

35

40

45

50

55

5
15
20
25
30

35

Redemption accountTo private sector
Banknotes

40
Ratio to GNP, percent

OthersForeign exchange
Total

To government
Net worth

Liability side

10

Notes: For nominal GNP, see the appendix. Each letter between vertical broken lines denotes the period in the
BOJ Centennial Committee (1982, 1983a, 1983b, 1984, 1985, 1986a, 1986b).
The legends in the graph above show the core of the item name for brevity. For example, “To government”(area of horizontal lines) obviously stands for “Assets to the government” in the upper part and “Liabilities
to the government” in the lower part of the graph. The same applies to other figures.
Sources: The author’s calculation using the aforementioned material of BOJ archives No. 80901 and BOJ
Centennial Committee (1986b).

40

Figure 2 Sensitivity of total assets ratio to nominal GNP(1) Total assets ratio to GNP under a different GNP series
Ratio to GNP, percent
a
b

c

40

d

e

f

g

h

25

30

35

40

48%

i

Total assets to orthodox GNP

35

Total assets to alternative GNP

30
25

20
15

10
5

0
1880

85

90

95

1900

05

10

15

20

45

50

55

Note: The orthodox and alternative series of nominal GNP are mainly from Ohkawa, Takamatsu, and Yamamoto(1974) or Fukao, Nakamura, and Nakabayashi (2017a) respectively. See the appendix for details.

(2) Total assets ratio to GNP using either semiannual or monthly data
Ratio to GNP, percent
a
b

c

40

d

e

f

g

h

35

40

48%

i

Semiannual total assets
Monthly total assets in March, June, Sep. and Dec.

35
30
25
20
15
10
5
0
1880

85

90

95

1900

05

10

15

20

25

30

45

50

55

Note: Monthly total assets in March, June, September, and December above are the total assets ratio to quarterly
annualized rates of nominal GNP, linearly interpolated. As mentioned in Section 3 (2), monthly total assets
are at the end of a mid-month week before 1945, and at the end of the month from 1945.

41

Figure 3
Bil. yen

Nominal GNP, 1874–1955baBil. yen

2.2
Nominal GNP, orthodox, annual
2.0
Linear interpolation, quarterly
1.8
Nominal GNP, alternative
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
187476 78 80 82 84 86 88 90 92 94 96

c

6.0
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
1896
96 98 1900 02 04 06 08 10 12 14

Bil. yen
g
d
e
f
22
20
18
16
14
12
10
Nominal GNP, orthodox, annual
8Linear interpolation, quarterly
6
Nominal GNP, alternative
4
2
0
12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
1912
Bil.yen
100
90
80

70
60

50

h
Nominal GNP,
orthodox, annual
Linear interpolation,quarterly
Nominal GNP,
alternative

40
30

20
10

0
19 35 36 37 38 39 40 41 42 43 44

Tril.yen
1.4
1.3
1.2
1.1
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
19 44 45 46 47

Tril. yen i
10
9

8
7
6

5
4

3
2
1

0
1947 48 49 50 51 52 53 54 55

Note: See the appendix for details. We omit quarterly rates using alternative GNP for brevity.
Sources: As for Nominal GNP, the orthodox series, 1875–84 are from Yamada (1957), 1885–1951 are from
Ohkawa, Takamatsu, and Yamamoto (1974). We interpolate quarterly values linearly for years with an
obvious up or down trend. (For other years with a peak or trough, we regard quarterly values as the samevalue of the annual data.) Data from the second quarter of 1951 are Cabinet Office National Accounts.
As for the alternative series of Nominal GNP, 1875–84 are from the maximum of several estimates, and
1885–1951 are mostly from Fukao, Nakamura, and Nakabayashi (2017a, 2017b, 2018).

42

Figure 4

Government paper money and bank notes issued in 1873–90

Mil. yen
130
120
110
100
90
80
Government paper money for circulation
70
Government paper money for temporal finance60
National bank notes
50
Bank of Japan notes
40
30
20
10
0
1873 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90
Note: Data are at the end of month. There are two types of government paper money, one for circulation, andthe other for temporal finance of revenue in the short-term.
Sources: MOF (1932b), p. 277, MOF (1932d) p. 382–383, Meiji zaiseishi hensankai (1905b),pp. 255–277,
Meiji zaiseishi hensankai (1905d), pp. 327–338.

Figure 570

The reserve fund in 1873–90

Mil. yen

60
50
40

Reserve fund30

of which: specie

20

10
0
1873 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90
Note: Data in 1873–74, 1875–85, and 1886–90 are the end of December, June, and March, respectively. Data
before 1872 is not available.
Sources: MOF (1932a), pp. 12–13, 46, MOF (1932c), pp. 418–419.

43

Figure 6
2.0

Price of paper money for gold or silver yen, and price of rice in 1868–93
Yen per k ok u

Yen

18

1.8

Paper money for 1 silver yen

1.6

Paper money for 1 gold yen

1.4

Price of rice, right scale Weaker paper money(stronger gold & silver yen)

16
14
12

1.2

10

1.0

8

0.8

6

0.6

 Stronger paper money(weaker gold & silver yen)

0.4
186869 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93

42

Note: One unit of koku equals to about 5.13 bushels or 180 liters. The gray line after 1886 shows the price ofsilver for 1 gold yen (paper money on a par with silver).
Sources: MOF (1932b), pp. 205, 245, MOF (1932c), pp. 346–350, 393–395, Toyo keizai (1927), pp. 145, 391.

Figure 7

80
70
60

50
40

Start of hereditary pensions

90

Mil. yen
Expenditures decreased aftera victory over feudal remnants

100

Expenditures and revenues of the government in 1868–86
Land tax
reformPensionbonds

Southwesternrebellion

Receipt from paper money issuance
Receipt from government debts
Taxes & other ordinary revenues
Total expenditures (including extraordinary)Ordinary expenditures

30
20
10
0

1868 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87

Notes: General accounts of the central government. Ordinary expenditures include expenditure for servicing
government debts. Extraordinary expenditures are expenses for suppressing the south-west rebellion in
the special accounts for such military expenses. As for the vertical bars and the horizontal markers, thewidth and the height show the monthly length of the fiscal year and the amount of revenue or expenditure,
respectively. The difference between “Ordinary expenditures” and “Taxes & other ordinary revenues”
shows fiscal balance. The length of fiscal terms in 1868–86 was basically with 12 months, although thestarting month varies, such as January, April, or July. The exceptional terms are as follows: December
1867 to 1868 with 13 months, January to September 1869 with 9 months, October 1871 to 1872 with 14
months (due to December 1872 lasting just 2 days when Japan changed from the Lunar calendar to the
Gregorian), January to June 1875 with 6 months, and July 1885 to March 1886 with 9 months.
Sources: MOF History Office (1998b), pp. 358–391, Meiji zaiseishi hensankai (1904b), pp. 165–392, Omori(2001).

44

Figure 8 Real economic growth, prices, and trade balance(1) Real GNP growth rate

Sources: 1877–87 are from Muroyama (2014), p. 188 (estimated using consumption deflator only). 1886–
1930 are from Ohkawa and Shinohara (1979), using revised deflators of imports and exports from
Ohkawa, Takamatsu, and Yamamoto (1974). 1931–44 and 1947–55 are from Miwa and Hara (2007)
reprinting the government statistics. 1945–46 are from Mizoguchi and Nojima (1992).

(2) Prices
WPI 1946:365%, 1947:196%, 1948:166%
CPI 1947:169%, 1948:193%

Year on year, percent

70
60
50
40
30
20
10
0
-10
-20
-30
1875 80

Consumer price index (CPI)
Retail sales prices (1937-49)
Wholesale price index (WPI)
WPI, 1897 base
WPI, Arita and Nakamura

85

90

95 1900

05

10

15

20

25

30

35

40

45

50

55

Sources: 1875–89 are from Arita and Nakamura (1992). WPI, 1897 base in 1889–1912 are from BOJ Statistics
Department (1966a), p. 76. The other WPI, retail sales price index, CPI are from Miwa and Hara (2007)
reprinting the official statistics.

(3) Trade balance
Ratio to GNP, percent

Trade balance

1945-48 n/a

8
6
4
2
0
-2
-4
-6
-8
1875 8085

90

95 1900

05

10

15

20

25

30

35

40

45

50

55

Sources: Trade balance is from BOJ Centennial Committee (1986b), pp. 340–349, nominal GNP is from Miwa
and Hara (2007) reprinting the official statistics.

45

The Bank’s balance sheet in 1882–96

Ratio to GNP, percent

Mil. yenb

40
35

Redemption

30

Government

25

Foreign20

Cash, bullion

Others-30

Private sector

Bank premises

70
B

Total assets

15

Semiannual

10501882 84
0

86

88

90

92

94

96

5
10
15
20
25
30
35
40

Redemption

OthersGovernment

Private sector

Foreign

Net worth

Banknotes

Total

b

500
Redemption
450
Others400
Government
350
Private sector
Foreign
300
Bank premises
250
Cash, bullion
200
Total assets
150
100
50
0
1882 84 86 88 90
0
50
100
150
Redemption
200
Others250
Government
300
Private sector
Foreign350
Net worth
400
Banknotes
450
Total
500

92

94

96

Indemnity

Figure 9Mil. yen

Ratio to GNP, percent

Note: As for the Nominal GNP used in the ratio, see Figure 3 and the appendix.
Sources: BOJ Centennial Committee (1986b) and the aforementioned material of BOJ archives No. 80901.

Figure 10
260
240
220
200
180
160
140
120
100
80
60
40
20
0

Paper money, bank notes, and specie reserves in 1882–96

Mil. yen

Percent

1882 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97

65
60
55
50
45
40
35
30
25
20
15
10
5
0

Bank of Japan notes
National bank notes
Government paper
money

Sepcie reserves,
government & BOJ
Specie reserves,
government

Specie reserve ratio (tototal money, right scale)Note: Specie reserves are at the end of year. Specie reserves of the government in 1897 are the difference
between receipt and disbursement in the government special account for paper money redemption.
Sources: MOF (1932b), pp. 286–290, MOF (1932c), pp. 391–393, Asahi shimbun (1930), p.118, Toyo keizai(1927), p.147.

46

The Bank’s balance sheet in 1897–1913

Ratio to GNP, percent

40
35
30

25

Bil. yenc
1.1
Others1
Government
0.9
Private sector
0.8
Foreign
0.7Bank premises
0.6
Cash, bullion
Total assets
0.5
0.4
0.3
0.2
0.1
0
18 96 98 1900 02 04 06 08 10 12 14
0
0.1
0.2
0.3
0.4
0.5
Others0.6
Government
Private sector
0.7
Foreign
0.8
Net worth
0.9
Banknotes
1
Total
1.1
Bil. yenc

Redemption
Government
ForeignCash, bullion

OthersPrivate sector
Bank premises
Total assets

20
15

Semiannual

1050
18 96 98 1900 02 04 06 08 10 12 14
0
5
10
15
20
25

30
35
40

Redemption
Government
Foreign
Banknotes

OthersPrivate sector
Net worth
Totalc

OthersGovernment

Private sector

Foreign

Bank premises

Cash, bullion

98

99 1900 01

02

03

04

OthersPrivate sector
Net worth
Total

Government
Foreign
Banknotes

05

Issuing foreign debts

Total assets

Banking Panic

Bil. yen
1.1
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
1896 97
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
Bil. yen

Panic of
1898

Monthly

Ratio to GNP, percent

47

06

07

08

09

10

Refinancing

Figure 11

11

12

13

14

The Bank’s balance sheet in 1914–19

Ratio to GNP, percent

35
30
25

OthersGovernment

Private sector

Foreign

Bank premises

Cash, bullion

2.5
2
1.5

10

1

5

0.5

14

16

15

18

17

19

0
19 13
0

20

5

0.5

10

1

15

1.5

20

2

25
35

14

3
3.5

4
Bil. yenBil. yen
3.5dRatio to GNP, percent

3
2.5
2

OthersGovernment

Private sector

Foreign

Bank premises

Cash, bullion

Total assets

1.5

U.S. entry ofWorld War I

40

15

16

17

18

19

OthersGovernment
Private sector
Foreingn
Net worth
Banknotes
Total

2.5

Government
Foreign
Banknotes

OthersPrivate sector
Net worth
Total

30

OthersGovernment
Private sector
Foreign
Bank premises
Cash, bullion
Total assets

3

15

0
19 13
0

d

3.5

Total assets

20

Semiannual

Bil. yen4d40

Rice riots

Figure 12

Monthly

1
0.5
0
19 13
0

14

15

16

17

0.5
1
1.5

2
2.5
3

OthersGovernment

Private sector

Foreign

Net worth

Banknotes

Total

3.5
Bil. yen

48

18

19

20

20

Figure 13

The Bank’s balance sheet in 1920–28

Ratio to GNP, percent

OthersPrivate sector
Bank premises
Total assets

35
30

Semiannual

25

Bil. yen4e40

Government
ForeignCash, bullioneGovernment
ForeignCash, bullion

OthersPrivate sector
Bank premises
Total assets

3.5
3
2.5

20

2

15

1.5

10

1

5

0.5

0
1919 20 21 22 23 24 25 26 27 28
001919 20 21 22 23 24 25 26 27 28
0

5

0.5

10

1

15

1.5

20

2

25

Government
Foreign
Banknotes

OthersPrivate sector
Net worth
Total

30
35

2.5
3
3.5

40

4
Bil. yen

Ratio to GNP, percent

4Bil. yen

Government
Foreign
Banknotes

OthersPrivate sector
Net worthTotaleOthersBank premises

3.5

3Government
Cash, bullion

Private sector
Total assets

Foreign

2.5
2
1.5

20

21

0.5
1

22

23

24

25

26

27

28
Panic of
1927

0
1919
0

Great Kanto
earthquake

0.5

BankingpanicMonthly

1

1.5
2
2.5
3
3.5
4
Bil. yen

Others
Net worthGovernment
Banknotes

49

Private sector
Total

ForeignFigure 14

The Bank’s balance sheet in 1928–31, and in 1932–36

Ratio to GNP, percent
f30

Semiannual

25

4

Government
ForeignCash, bullion

OthersPrivate sector
Bank premises
Total assets

35

Bil. yen

g

40

3.5

3
2

15

1.5

10

1

5

0.5
29

30

31

33

32

34

35

0
19 28 29 30 31 32 33 34 35 36
0

36

5

0.5

10

1

15

1.5

20

2

25
30
35
40

2.5

Government
Foreign
Banknotes

OthersPrivate sector
Net worth
Total

3.5
4
Bil. yenBil. yen
4gf

OthersForeign
Total assets

3

Government
Foreign
Banknotes

OthersPrivate sector
Net worthTotal

3

Ratio to GNP, percent

3.5

Government
ForeignCash, bullion

2.5

20

0
1928
0

g

f
OthersPrivate sector
Bank premises
Total assets

Government
Bank premises

Private sector
Cash, bullion

2.5
2
1.5
U.K.
left off
gold

0
1928
0
0.5
1

29

30

31

32

33

34

35

Japan
left off
gold

0.5

Gold
standard
restoredMonthly

1

1.5
2
2.5
3
3.5

OthersForeign
Total

Government
Net worth

4Bil. yen

50

Private sector
Banknotes

36

Figure 15

The Bank’s balance sheet in 1936–45

Ratio to GNP, percent
40

OthersGovernment
Private sector
Foreign
Bank premises
Cash, bullion
Total assets

35hBil.yen70

Others

60

5

50

4

40

Bank premises

330

Total assets

10

2

20

5

1

10

0
19 35 36 37 38 39 40 41 42 43 44 45
00
19 35 36 37 38 39 40
00
19 40 41 42 43 44 45
0

5

1

10

10

2

20

3

30

4

40

5

50

6

60

7
Bil. yen70
Bil. yen

15

15

OthersGovernment
Private sector
Foreign
Net worth
Banknotes
Total

20
25
30

35

40
Ratio to GNP, percent
748%

Bil. yen
OthersPrivate sector
Bank premises
Total assets

6

Government
ForeignCash, bullion

Bil. yen
14

Private sector

ForeignCash, bullion

Bil. yen
70

h

12

60

10

50

4

8

40

3

6

30

2

4

20

1

2

10

36

37

38

39

40

0
1940
0
2

2

4

3

6

China-Japan
w ar

1

4

OthersPrivate sector
Net worth
Total

5
6
7

Bil. yen

8
Government
Foreign
Banknotes

10
12

14
Bil.yen

51

41

42

43
Withdraw al from
Guadalcanal

0
1935
0

Pacific War

5

OthersGovernment
Private sector
Foreign
Net worth
Banknotes
Total

0
1943
0

44

45

10
20
30
40
50
60

70
Bil. yenMore intense air
attacks

20

Government

Larger munition
productions

25

Monthly

Bil. yen7
630

Semiannual48%hThe Bank’s balance sheet in 1945–52

Ratio to GNP, percent
i4048%

Bil. yen
300

OthersGovernment
Private sector
Foreign
Bank premises
Cash, bullion
Total assets

35

30
25
20

250
200
150

15

100

Semiannual

10

50

5

0
19 45 46 47 48 49 50 51 52 53 54 55
0
5

50

10

100

15
20

OthersGovernment
Private sector
Foreign
Net worth
Banknotes
Total

25
30
35

150
200
250

40
48%
Ratio to GNP, percent

Tril. yen
0.5

Bil. yen
200

0.4

150

Cash, bullion
Total assets

46

47

0
19 47
0

48

0.1

Emergency measureswith new banknotes

49
The Dodge plan

Monthly200
Bil. yen

Bank premises

0.1

50

150

Tril. yen
1
Others0.9
Government
0.8
Private sector
Foreign
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
19 49
50
51
52
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
OthersGovernment
0.8
Private sector
0.9
Foreign1
Tril. yen

i

0.2

50

100

300
Bil. yen

0.3

100

0
19 45
0

0
19 45 46 47
0

0.2

0.3
0.4
0.5
Tril. yen

Tril. yeni
1Others0.9
Government
Private sector
0.8
Foreign
Bank premises
0.7
Cash, bullion
0.6
Total assets
0.5
0.4
0.3
0.2
0.1
0
19 47 48 49 50 51 52 53 54 55
0
0.1
0.2
0.3
0.4
0.5
Others0.6
Government
Private sector
0.7
Foreign
0.8
Net worth
Banknotes
0.9
Total
1
Tril. yen

Sovereignty
regained

Figure 16

Banknotes
Net Worth
Total

52

53

54

55

Figure 17 The Bank’s balance sheet in 1955–2019(1) Total assets and items in terms of ratio to GDP

15
10

OthersGovernment

Trust property, etc.

Purchase w/ resale, etc.

Private sector
Cash, bullion

Foreign
Total assets

501955 60
0

65

70

75

80

85

90

95 2000 05

5
10
15
20
25
30
35
40

OthersPrivate sector
Net worth
Total

Government
Foreign
Banknotes

QQE with yield
curve control

20

Plaza accord;
Bubble and its
burst

Ratio to GDP, percent

120
110
100
90
80
70
60
50
40
30
20
10
0
10 2010 12 14 16 18
0
10
20
30
40
50
60
70
80
90
100
110
120
Quantitativeand qualitativeeasing (QQE)25

Yen beganfloating;
First oil crisis

Quantitativeeasing policy

30

Return High grow th
toordinary

Uncollateralized
overnight callrate as target

35

Zero interest rate policy

Comprehensive
monetary easing policy

Ratio to GDP, percent

40

Ratio to GDP, percent

Ratio to GDP, percent

Notes: Ratios are a monthly value to a seasonally adjusted annual rate of a quarter with the month. We use
monthly values here as the average of data of the current and the previous months for consistency with the
mid-month basis. The items are the same as those in 1955, except “Purchase w/ resale, etc.” (fundsupplying operations such as purchases with a resale agreement and advance against government securities
as collateral) and “Trust property, etc.” (such as stocks held as trust property, asset-backed securities,
commercial papers, corporate bonds, equity trust funds, real estate investment trust funds).

(2) Total assets and nominal GDP (quarterly annual rate, seasonally adjusted)
Tril. yen
160
140
Nominal
GDP
120
Total
100
assets
80
60
40
20
0
1955 60 65 70

Tril. yen
600
500

Nominal GDP
Total assets

400

Tril. yen
600
400

300
200

200

100
75

0
19 75 80 85 90 95 2000 05 10

Nominal GDP
Total assets

02010 12 14 16 18

Note: Nominal GDP in 1955–79, 1980–94, 1995–2008, 2009–19 is the 1990 base, the 2000 base (chain
weighted), the 2011 base (chain weighted), and the 2015 base, respectively.
Sources: Bank of Japan, Bank of Japan Statistics, Economic Statistics of Japan, Economic Statistics Annual,
Economic Statistics Monthly, Financial and Economic Statistics Monthly; Cabinet Office, National
Accounts.

53

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