Three Key Principles of the Bank of Japan’s Portfolio Selection I will next talk about the philosophy that guides the Bank in portfolio selection——in other words, the key principles in selecting a central bank’s portfolio. There are three. The first principle is to maintain the soundness of the Bank’s assets.
In other words, assets and collateral held by the Bank must be of high quality. The Bank has devised a number of methods to achieve this. When supplying funds to financial institutions through loans, the Bank acquires financial assets that are trustworthy as collateral.