QuestionDon't central bank finances affect confidence in the currency?

Currently, in many countries and regions including Japan, confidence in the currency is not directly ensured by the assets, such as gold, held by the central bank, but by the appropriate conduct of monetary policy with the aim of achieving price stability. Given this, central banks are generally set up in such a way that they make profits from a somewhat longer-term perspective, and they can issue their own currency as a means of payment and settlement. Therefore, even if the central bank temporarily makes losses or has negative equity, this does not impede its ability to conduct monetary policy. In fact, while some overseas central banks have seen a decrease in profits or capital, confidence in their currencies has been maintained. That said, this does not mean that the central bank can run up unlimited losses and negative equity. If the central bank's financial risks become a matter of undue attention and give rise to unnecessary confusion over monetary policy, there is a risk that this could lead to a decline in confidence in its currency.
The Bank of Japan conducts policy as appropriate while also paying attention to its financial soundness.