The BOJ’s foreign asset stakes have been made by Reuters to get the green investment

By Leika Kihara and Tetsushi Kajimoto

TOKYO (Reuters) – The Bank of Japan (BOJ) said on Friday it would start buying green bonds using its foreign reserves in an effort to boost global investment in climate change activities.

Japan’s $ 1.4 trillion in foreign reserves is held primarily by the Ministry of Finance, and not by the BOJ, so the decision is probably a symbolic move to raise awareness of the need to promote green finance. The BOJ has about $ 70 billion in foreign assets.

“The amount of green bonds in the global market is increasing, a trend that is likely to continue. Because of this situation, the Bank will buy green bonds denominated in foreign currencies issued by governments and other foreign institutions,” he said.

The move occurs when other large central banks use the power of institutions to assume climate change.

Last week, the European Central Bank said climate change would be a factor linked to the disclosure of financial information, risk assessment, guarantees and purchases of corporate sector assets.

In a outline of monetary policy steps to address climate risks published on Friday, the BOJ also said it would encourage financial institutions to improve their knowledge of climate risks.

BOJ, in collaboration with the Financial Services Agency of the Regulatory Bank of Japan, is working on pilot exercises to study climate risk scenarios in large financial institutions.

The central bank, through local studies and external oversight, will talk to financial institutions about their efforts to address climate risks and their commitment to getting carbon-neutral businesses from lenders.

“The bank will actively assist financial institutions in identifying and managing climate-related financial risks in order to maintain the stability of the financial system and the proper functioning of financial intermediation,” the scheme said.

The outline, published separately from the BOJ’s monetary policy decision on Friday, included details of a new scheme to fund activities to tackle climate change.