QE is an unconventional monetary policy where a central bank buys large quantities of financial assets to stimulate the economy.

BOJ: The QE Pioneer

The Bank of Japan pioneered QE in 2001 and has been the most aggressive practitioner:

  • BOJ owns ~50% of all Japanese government bonds
  • BOJ is a top-10 shareholder in most Japanese blue-chip stocks (through ETF purchases)
  • BOJ balance sheet: ~$5 trillion (larger than Japan's GDP)

Impact on Markets

QE bullish for stocks because:

  • Pushes interest rates down → stocks more attractive
  • Injects liquidity → money flows into assets
  • Weakens currency → boosts exporters

QE Across Asia

  • Japan: Massive, ongoing since 2013
  • China: Targeted, through relending facilities
  • India: Limited, mainly during COVID
  • South Korea: Small-scale during COVID