Japan finance minister: economic growth potential may warrant review of pension asset mix

Japan's Finance Minister Satsuki Katayama indicated that a potential increase in the nation's economic growth could warrant a review of how its state pension funds are invested. She noted that the Government Pension Investment Fund (GPIF) conducts annual reviews of its portfolio and asset allocation.

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Naturally, the assumptions underlying those reviews include factors such as the economy's potential growth rate, particularly as the government's policies seek to create a major turning point by placing considerable emphasis on investment.

These reviews naturally incorporate assumptions about the economy's potential growth rate, especially as government policies aim to stimulate investment. Katayama's previous remarks about encouraging pension funds to invest more in domestic assets had previously influenced the yen and Japanese government bonds.

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We will pursue measures to encourage greater investment in Japanese financial assets. However, the government cannot intervene or force pension funds to do so, and I want to make that absolutely clear.

While sources suggested Japan has no immediate plans to alter the GPIF's target asset allocations, the fund could operate within existing ranges to boost domestic investment. The GPIF currently allocates 25% each to domestic bonds, foreign bonds, domestic equities, and foreign equities, with a 6-percentage-point deviation allowed for domestic bonds.

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We believe that enhancing the international competitiveness of the Japanese economy will, in turn, help maintain confidence in the yen.

Katayama reaffirmed the government's commitment to promoting investment in Japanese financial assets, but she emphasized that such actions cannot be mandated. "The government cannot intervene or force pension funds to do so, and I want to make that absolutely clear," she stated. Regarding currency fluctuations, she added that the government is prepared to take necessary actions to address the yen's weakness.

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In any case, with regard to foreign exchange, we stand ready to take appropriate action whenever necessary.