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The Liberal Democratic Party has shot down the request put forth by the Government Pension Investment Fund to lift the ban imposed on it to make direct stock investments. The LDP made a final decision on Monday to keep the ban in place, fearing the government fund would gain direct control over private companies as well as bring down the pension benefits in cases of losses incurred on investments.
Yasushi Ando, a Liberal Democratic Party adviser on pensions, said that Japan's Government Pension Investment Fund should invest $95 billion in private equity and venture capital over a decade. GPIF is the world's largest pension fund with ¥124 trillion under management.
Government Pension Investment Fund president Takahiro Mitani's comments about Bank of Japan meeting its 2% infaltion goal was contradictory to the statements made by Prime Minister Shinzo Abe appointee and economist Takatoshi Ito.
Former Japanese Ministry of Finance official Eisuke Sakakibara said the yen may weaken further as the government pension fund will follow the proposal to invest more of its holdings overseas.
Because Japan's central bank absorbs JPY7 trillion worth of debt, primary dealers of Japanese government bonds are not concerned over plans of Government Pension Investment Fund to reduce its government debt holding.
According to sources who were familiar with the proceedings, the government of Japan will be making the USD1.2 trillion Government Pension Investment Fund (GPIF) exist as a separate entity in order to diversify its investments.