Japan’s Global Pension Investment Fund (GPIF), the world’s largest pension fund, is looking for input to understand the way in which the global low yield environment has been created and entrenched.

It said information and ideas “may include aspects such as demographics and modern monetary theory”.

The ¥167.5trn (€1.4trn) asset owner also wants research and ideas to help estimate how long the global zero-interest rate environment will continue, saying “this may include aspects such as reversal interest rate”.

In its request for information, GPIF also specified wanting ideas on a way to estimate expected return for domestic and foreign bonds in the post-pandemic era.

It would consider conducting further research on the development of such a methodology based on the information it received, it added.

“A zero-interest rate environment has firmly taken root in Japan since the country’s central bank cut the uncollateralized call rate (the policy rate corresponding to the US Federal Funds rate) to 0.15% in February 1999, despite the Bank of Japan having departed from this policy once in 2000 and again in 2006,” wrote the GPIF.

“While zero interest rates were at first considered a temporary measure, twenty years have passed since they were first introduced, and even long-term interest rates have been kept around zero since 2016 under the BOJ’s yield curve control policy,” it added.

“Now, with the emergence of the first global pandemic in over 100 years, the Federal Reserve Board revived its own zero-interest rate policy in March of this year for the first time since December 2015, and the US long-term yield also dropped below 1% for the first time in history.”

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