qqe ). the boj has been increasing the monetary base at an annual pace of about 80 trillion yen. it has also been purchasing japanese government bonds ( jgbs ) so that their amount outstanding will increase at an annual pace also of about 80 trillion yen. with a view to encouraging a decline in interest rates across the entire yield curve, jgbs with all maturities, including 40 - year bonds, are eligible for the boj ’ s purchase and the average remaining maturity of government bonds to be purchased is currently targeted in the range of seven to ten years. in addition to government bonds, the boj makes such purchases as exchange - traded funds ( etfs ) and japan real estate investment trusts ( j - reits ). this balance sheet policy has contributed to an expansion of corporate profits and employment together with a stock price hike and depreciation of the yen, which have helped improve the output gap by about 2 percentage points. the ecb ( as well as european national central banks ) has purchased euro - denominated bonds issued by euro - area governments, agencies, and european institutions since march 2015 in an effort to restore the size of its balance sheet to that of march 2012 – or about bis central bankers ’ speeches 3 trillion euros. in conjunction with covered bonds and asset - backed securities ( abs ) purchased since october 2014, the monthly pace of the combined asset purchase is set at about 60 billion euros. except for very long - dated assets, the remaining maturity of eligible public sector assets to be purchased must be within two to 30 years. in principle, the assets need to be investment grade ( above bbb – ). this policy may be regarded as a reaction to growing concerns over the potentially weakened effectiveness of monetary easing as a result of the shrinking balance sheet amid a decline in some inflation expectation indicators. although the interest rate applied to a central bank ’ s asset purchases is generally determined through supply and demand forces in the relevant market, the ecb applies the deposit facility rate of minus 0. 2 percent as a floor rate. with regard to the second common monetary - easing instrument, forward guidance has been adopted by the two central banks with the objective of indicating a future direction for the ongoing monetary easing. this is expected to produce a signaling effect. the most commonly observed form is to signal the intention to maintain a significantly low policy interest rate over a long period. this instrument is supposed to exert downward pressure on the short - to medium - term yield curve

sayuri shirai : unconventional monetary policies of the bank of japan and european central bank remarks by ms sayuri shirai, member of the policy board of the bank of japan, at the panel discussion “ monetary policy and central banking : a global outlook ”, at the bruegel annual meeting, brussels, 8 september 2015. * * * accompanying charts can be found at the end of the speech. i. introduction thank you very much for inviting me as a panelist to the discussion on monetary policy at the bruegel annual meeting. recently, the directions of monetary policy among advanced economies have become increasingly divergent. whereas the u. s. federal reserve has begun considering normalization of its policy interest rates, the bank of japan ( boj ) and european central bank ( ecb ) continue their large - scale asset purchase programs. as one of the policy makers at the boj, i have closely monitored developments in the global economy and the monetary policies of major central banks. i would therefore like to talk today about the features of monetary easing of the two central banks ( boj and ecb ) as well as about developments regarding inflation expectations in japan and the euro area. let me stress that the views expressed here are entirely my own and do not necessarily represent those of the boj. ii. unconventional monetary policies – common features of the boj and ecb the monetary - easing instruments adopted by the two central banks have several features in common. they are ( 1 ) large - scale asset purchases centered on government bonds, ( 2 ) forward guidance used to indicate a future monetary - easing stance, and ( 3 ) a conditional long - term lending facility ( chart 1 and reference chart ). regarding the first instrument, the large - scale asset - purchase program is referred to as a “ balance sheet policy. ” this enables a central bank to expand the size of its balance sheet to a predetermined level and to maintain that size over a relatively long period. one of the expected results here is a portfolio rebalancing effect. this policy aims at promoting holders of government bonds to shift away from those bonds and invest in riskier assets, such as loans and corporate bonds, stocks, foreign securities, and real estate, thereby affecting a wide range of markets and energizing economic activity. since april 2013, the boj has adopted an aggressive balance sheet policy by setting a target on the annual pace of the monetary base increase under quantitative and qualitative monetary easing (