The Foreign Exchange Fund Special Account is said to be worth around ¥200 trillion. This article explains how it invests the foreign-currency assets acquired through foreign exchange intervention, through an interview with the author and an introduction to his book.
The Foreign Exchange Fund Special Account has attracted attention as the special account through which the government manages foreign currency acquired through foreign exchange intervention. Historically, key aspects of the account have been opaque. Interest in it has recently resurfaced following remarks during the House of Representatives election suggesting that a weaker yen was a windfall.
This article features an interview with the author, Hattori Takahiro (服部孝洋), and introduces his book, “What Is Foreign Exchange Intervention? The Mystery Behind the ¥200 Trillion Foreign Exchange Fund Special Account,” which explains the account’s origins and the reality of its investment operations from the basics.
The article explains that the Foreign Exchange Fund Special Account, managed by the Ministry of Finance, holds as foreign-currency assets those acquired through interventions involving the sale of yen and purchase of dollars. It also addresses debate over the breakdown of the assets and how they should be valued.
The figures presented in the article include a total size of ¥200 trillion and unrealized gains of approximately ¥50 trillion. It also discusses whether these gains should be used as a source of government funding and how unrealized gains should be handled.