(Bloomberg) -- The Bank of Japan needs a vision for eventually unwinding its massive asset purchases if it eases policy further, according to a former BOJ official.

“It’s becoming important for the BOJ to not simply say it is strengthening stimulus but to plot the course of events, to tell the story of how these steps will lead to normalization,” said Takashi Kozu, who held a wide range of positions at the central bank and was a member of the Basel Committee on Banking Supervision from 2006 to 2010.

Simply pledging to strengthen stimulus is no longer enough to convince investors its price target will be met, according to Kozu, who was speaking amid concern that waning inflation could prompt the BOJ to increase stimulus, even as the side effects of policy mount. The central bank has failed to achieve its 2 percent goal after six years of aggressive purchases of Japanese government bonds and exchange-traded funds, which is fueling skepticism about its effectiveness.

“The BOJ must paint a picture that includes an image of an exit,” Kozu, who is now president of the Ricoh Institute of Sustainability and Business in Tokyo, said in an interview on April 11.

He suggested one way to show how it could unwind the open-ended ETF purchases would be to bundle them into some sort of investment trust or mutual fund that could be sold to financial institutions and pension funds.

The BOJ targets purchases of 6 trillion yen ($54 billion) of ETFs a year as part of its easing program.

“The BOJ needs to craft a narrative that turns the present unprecedented easing program into something that matches the financial intermediary needs of the aging society,” Kozu said.

To contact the reporters on this story: Chikako Mogi in Tokyo at cmogi@bloomberg.net;Masahiro Hidaka in Tokyo at mhidaka@bloomberg.net

To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net, Brett Miller, Henry Hoenig

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