Exclusive: BOJ to investigate high-risk trades by domestic firms after Archegos: Nikkei

TOKYO (Reuters) – Japan’s Financial Services Agency and the Bank of Japan will investigate high-risk trades by domestic firms after the Archegos fallout, the Nikkei business daily reported on Wednesday.

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Japan’s central bank issues digital currency

TOKYO (Reuters) – The Bank of Japan (BOJ) began experiments on Monday to study the feasibility of issuing its own digital currency, joining efforts by other central banks that are aiming to match the innovation in the field achieved by the private sector.

The first phase of experiments, to be carried out until March 2022, will focus on testing the technical feasibility of issuing, distributing and redeeming a central bank digital currency (CBDC), the BOJ said in a statement.

The BOJ will thereafter move to the second phase of experiments that will scrutinise more detailed functions, such as whether to set limits on the amount of CBDC each entity can hold.

If necessary, the central bank will launch a pilot programme that involves payment service providers and end users, BOJ Executive Director Shinichi Uchida said last month.

“While there is no change in the BOJ’s stance it currently has no plan to issue CBDC, we believe initiating experiments at this stage is a necessary step,” Uchida told a committee of policymakers and bank lobbies looking into CBDC.

Global central banks are looking at developing digital currencies to modernise their financial systems, ward off the threat from cryptocurrencies and speed up domestic and international payments.

While China leads the pack, the BOJ has been speeding up efforts to catch up with a plan announced in October to begin experimenting on how to operate its own digital currency.

Exclusive: MUFG Securities loses $270 million to U.S. related clients

TOKYO (Reuters) – The securities unit of Japan’s Mitsubishi UFJ Financial Group said on Wednesday its loss related to an unnamed U.S. client was estimated around $270 million, after it flagged potential losses of around $300 million a day before.

The loss will be reflected in the first quarter for the next financial year starting in April, Mitsubishi UFJ Securities Holdings Co Ltd said in a statement.

Japan government halts use of message app Line for sensitive information

TOKYO (Reuters) – The Japanese government has decided to temporarily halt its use of popular messaging app Line, owned by SoftBank Corp’s Z Holdings, to handle sensitive information, Chief Cabinet Secretary Katsunobu Kato said on Monday.

The decision comes after domestic media reports this month that four engineers at a Line affiliate in Shanghai were allowed to access servers in Japan from 2018 that contained the names, telephone numbers and e-mail addresses of users.

Following the reports, a spokesman for Line, which has 186 million users worldwide, said the company has since blocked access to user data at the Chinese affiliate.

“The government will halt the use of Line when handling sensitive information for now, and set up a task force swiftly, so that usage guidelines can be compiled soon,” Kato told a regular news conference.

Exclusive: Japan to issue digital vaccine passport: Nikkei

(Reuters) – Japan is set to issue digital health certificates to citizens who have been vaccinated against COVID-19, joining China, the EU and other countries that have adopted similar measures aimed at opening up overseas travel, the Nikkei reported s.nikkei.com/3stfAX6 on Saturday.

In line with international standards, the certificate can be managed on a mobile app, allowing the carrier to present the proof of vaccination when boarding a plane or checking in to a hotel, the report said.

The app is also focused on foreigners staying in Japan and returning to their respective home countries, according to the report.

Highlights: Key tweaks to BOJ’s yield curve control, stimulus programme

TOKYO (Reuters) – The Bank of Japan loosened its grip on long-term bond yields and laid the groundwork to taper its huge asset purchases, as part of steps to make its stimulus programme sustainable enough to weather a prolonged battle to fire up inflation.

The following is a summary of key results of the central bank’s review of its policy tools, which was announced after its two-day policy meeting that ended on Friday:

OPERATIONAL TWEAKS TO YIELD CURVE CONTROL

** The BOJ left unchanged its 0% target for 10-year bond yields. But it clarified that long-term yields can move up and down 0.25% around the target, slightly more than the implicit 0.2% level that markets had seen as the BOJ’s line in the sand.

** The move is aimed at allowing yields to fluctuate more and breathe life back into a market made dormant by the BOJ’s dominance. But the BOJ stressed the priority was to keep yields “stably low” as the economy feels the damage from COVID-19.

** The BOJ won’t try to prevent yields from falling below the band too rigidly. But it will act forcefully to prevent sharp rises in yields with a new weapon – a “special” operation under which it will buy unlimited amounts of bonds for consecutive days at a set price.

TWEAK TO ASSET PURCHASES

** The BOJ removed guidance to buy exchange-traded funds (ETF) at an annual pace of roughly 6 trillion yen to make its purchases more “flexible and nimble.”

** Instead of buying at a set pace, the BOJ will buy ETFs only when markets destabilise under a 12 trillion-yen ceiling it set when COVID-19 jolted stock prices in March last year.

** BOJ staff will immediately report to the board whenever they buy ETFs to ensure there is governance on how the purchases are made. The rule suggests the BOJ won’t step into the market so frequently, some analysts say.

** The BOJ said it will keep purchases of ETFs to only those linked to the broader Topix, removing Nikkei-linked ETFs from the programme.

** The BOJ also took out guidance to buy real-estate trust funds (REITs) by 90 billion yen per year, saying it will only buy when markets destabilise under a ceiling of 180 billion yen.

MITIGATING SIDE-EFFECTS

** The BOJ adopted a new scheme similar to that of the European Central Bank, under which it pays interest of up to 0.2% to financial institutions that tap its loan programmes.

** The scheme is aimed at mitigating the side effects of negative rates, which have hurt financial institutions’ margin and could eventually discourage them from boosting lending.

** The BOJ says the scheme is part of efforts to dispel a dominant market view that the accumulating side-effects of its easy policy will discourage the BOJ from cutting rates further.

** The BOJ also made tweaks to its three-tier deposit reserve system to address distortions its negative rate policy created in Japan’s money market.

** In four of the BOJ’s eight rate-setting meetings each year, the board will be briefed on financial system risks from the bank’s division in charge. This will ensure any decision to ramp up stimulus will take into account the impact on Japan’s fragile banking sector.

Face editing: Japanese biker tricks internet into thinking he is a young woman

Photos of a smiling young woman with her motorbike proved popular with social media users in Japan and began to notch up hundreds of likes.

The man, Zonggu, alongside a picture of his edited face
image captionThe man, Zonggu, had used photo editing apps to make himself look like a young woman

But some eagle-eyed followers noticed things did not add up; her arm seemed very hairy in one photo, and a mirror reflection showed a different face.

A TV show revealed the star of Twitter user @azusagakuyuki was actually a 50-year-old man named Zonggu. 

He admitted to using photo editing apps to create his alter ego. View original tweet on Twitter

Zonggu told the TV programme Getsuyou Kara Yofukashi (Sitting Up Late From Monday) that he had wanted to increase his presence on social media and believed people would prefer to see a “younger beautiful woman” rather than an old “uncle”.

“No-one will read what a normal middle-aged man, taking care of his motorcycle and taking pictures outside, posts on his account,” he said.

Zonggu said he had been surprised by the results of editing apps such as FaceApp.

“First I just tried, then it happened to turn out to be fairly pretty. I get as many as 1,000 ‘likes’ now, though it was usually below 10 before,” he said, adding: “I got carried away gradually as I tried to make it cuter.”

Picture of a young woman with her motorbike on Twitter handle @azusagakuyuki
image captionZonggu’s Twitter following reached 19,000 when he posted as his alter ego

Zonggu’s big reveal on the show had a mostly positive reaction from his 19,000 followers.

“I watched the TV show and became your fan!”, one wrote. Another said: “You have superb magic skills!!

Editing software such as FaceApp allows users to change the appearance of faces in photos, for example to look younger or older.

But the tools have prompted privacy concerns with the FBI warning in 2019 that the Russia-developed FaceApp posed a “potential counterintelligence threat”.

Exclusive: Tepco shares slump over nuclear safety breaches

TOKYO (Reuters) – Tokyo Electric Power (Tepco) shares fell about 7% after Japan’s atomic regulator found safety breaches at the company’s Kashiwazaki Kariwa station and the industry minister said it was not likely to be able to restart the plant anytime soon.

Tepco shares had surged in recent months on hopes it would be able to restart Kashiwazaki Kariwa, the world’s biggest nuclear station, after years of trying to convince regulators and local residents it had learnt the lessons of the Fukushima disaster ten years ago.

In turning point for Kuroda, BOJ may phase out asset-buying goal

TOKYO (Reuters) – The Bank of Japan may phase out a numerical target for its risky asset buying at a policy review on Friday, highlighting the rising cost of prolonged easing and marking a turning point for Governor Haruhiko Kuroda’s massive stimulus programme.

The central bank is also likely to clarify how much it will allow bond yields to deviate from its 0% target, and consider steps to address the side effects of negative interest rates.

The accumulating cost of Kuroda’s eight-year experiment to fire up inflation, while battling economic headwinds from the COVID-19 pandemic with a dwindling tool-kit, have raised questions about the sustainability of the BOJ’s easing policy.

“The BOJ’s current framework is a patchwork of measures taken in the past eight years. It’s ideal to clear some of them up,” said former BOJ executive Shigenori Shiratsuka.

“But that’s probably something too ambitious for the BOJ to embark on at the March review.”

The BOJ’s review has drawn the close attention of markets as global recovery hopes push up bond yields in many economies including in Japan, challenging the BOJ’s efforts to cap 10-year yields at zero under its yield curve control (YCC) policy.

The findings of its review will be announced after a two-day policy meeting ending on Friday, where the BOJ is widely expected to keep its interest rate targets unchanged.

COMMUNICATION CHALLENGE

With its massive buying drawing criticism for distorting markets, the BOJ will make its purchases of exchange-traded funds (ETF) similar to currency intervention: stepping in only when a shock event triggers market turbulence, according to sources familiar with the BOJ’s thinking.

That would mean watering down, or removing one of its two pledges on ETFs – to buy them at an annual pace of 6 trillion yen ($55 billion) and by up to 12 trillion yen.

Sources say the BOJ will not want to give the impression it is dialing back stimulus even if it was tapering.

This is no easy task even for Kuroda who, as Japan’s former top currency diplomat, was known for his skills in swaying yen moves with verbal warnings.

The review will also debate ways to breathe life back to a bond market made dormant by the BOJ’s dominance. The challenge will be to signal to markets the BOJ will allow yields to move more – but not rise too much and hurt a fragile economy.

The conflicting goals had led to mixed messages by Kuroda and his deputy, Masayoshi Amamiya, that left investors second guessing the BOJ’s intentions.

The BOJ has said any tweaks it makes at the review will be more a fine-tuning of its tools than an overhaul of YCC.

“It’s unlikely the BOJ can come up with an outcome that has a substantial impact on the economy and markets,” said former BOJ deputy governor Hirohide Yamaguchi.

“The review will probably be just a show of gesture that it’s doing ‘something’ to address the cost.”

($1 = 109.1000 yen)

In Japan, vending machines help ease access to COVID-19 tests

TOKYO (Reuters) – In Japan, convenience is king and getting tested for COVID-19 can be highly inconvenient. Part of solution, as it is for a range of daily necessities in Tokyo, has become the humble vending machine.

Eager to conserve manpower and hospital resources, the government conducts just 40,000 polymerase chain reaction (PCR) tests a day, a quarter of its capacity, restricting them to people who are quite symptomatic or have had a high chance of being infected.

That’s led to the public to rely heavily on private clinics or buying PCR tests by other means.

Vending machines selling test kits offer consumers the option of avoiding crowded clinics or having to wait for an appointment, said Hideki Takemura, director of the Laketown Takenoko Ear Nose and Throat Clinic which has set up seven machines in the greater Tokyo area.

“Japan was conducting a ridiculously low number of PCR tests and as a result more and more people couldn’t tell whether they had a cold or the coronavirus,” Takemura told Reuters. “Without PCR tests, no diagnosis is possible and I really felt we had to do more so that people could be diagnosed early and isolate early.”

Takemura said there was a huge response from the public when the machines were first deployed and some needed to be emptied of money twice a day.

Demand has since ebbed somewhat as a third wave of cases subsided amid a state of emergency. New cases in Tokyo have averaged around 250 over the past seven days compared with several days of more than 2,000 in early January.

Each vending machine holds about 60 testing kits which sell for 4,500 yen ($40). Customers then mail off a saliva sample for processing.

“As a medical worker, I’d be very happy if the number of tests decrease along with cases,” Takemura said.

Japan has about 4.1 million vending machines in operation, the most in the world per capita, according to a trade group.

In addition to vending machines, PCR tests have become increasingly available to the public via sales at drugstores or over the internet.

($1 = 108.3800 yen)