Is the alternative to the “banknote principle” necessary? At the April 3–4 MPM, the Bank decided to temporarily suspend the so-called banknote principle until it achieved the price stability target.
However, it is not necessary to repudiate the underlying concept of the principle that the amount of banknotes in circulation – namely, the Bank’s long-term liabilities – should be backed by the purchasing of JGBs – that is, longterm assets. I understand that the Bank should resume the purchases in line with the banknote principle in the future.