Bank of Japan policy hurts sustainable finance.

In recent months, the Nikkei stock average recorded its highest levels in 30 years. The remarkable stock performance contrasts with the fragile economic conditions caused by the second state of emergency declaration in Tokyo and nine other prefectures amid the highest number of infections and deaths since the outbreak of the COVID-19 pandemic. The yen's persistent appreciation since the middle of last year is also hurting Japanese firms' foreign profits valued in yen.

Japan's stock prices quickly rebounded after plummeting last March as the pandemic took hold. The major driver is higher U.S. stock prices - driven by excessive liquidity arising from massive monetary easing generated by the U.S. Federal Reserve. The impressive sales performance of large U.S. tech...