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The Bank of Japan astounded markets.

This is an audio transcript of the episode of the FT News Briefing podcast: 'The Bank of Japan astounds markets.'

The Bank of Japan astounded markets.

Smith, Jessica

The Financial Times wishes you a good morning. It's Wednesday, December 21st. And now for your FT News Briefing.

Markets shuddered when Japan's central bank finally caved. A gang of FTX customers is attempting to get to the head of the refund line. And Tom Wilson of the Financial Times looks back on a remarkable year in energy markets.

Wilson, Tom

I mean, this chapter would be called "Russia" if it were in this chapter.

Smith, Jessica

I'm Jess Smith, filling in for Marc Filippino, and I've got the news you need to get your day started.

The Bank of Japan surprised investors by changing its monetary policy. Japan's central bankers had long maintained an ultra-loose monetary policy, refusing to join other central banks in raising interest rates. However, BOJ officials, led by governor Haruhiko Kuroda, announced yesterday that 10-year bond yields will be allowed to fluctuate by half a percentage point rather than a quarter of a percentage point. According to Jennifer Hughes of the Financial Times, Japan's move has exacerbated the hawkish message that markets have been hearing.

Hughes, Jennifer

It's as if there was a "hold my beer" race among the world's most powerful central bankers. Last Wednesday, Fed Chairman Jerome Powell emphasized that we still have a long way to go before achieving price stability. The next day, Christine Lagarde of the European Central Bank, the European Central Bank, had her "hold my beer" moment and became even more hawkish. And now we have Kuroda, the one who has kept to this severe easing strategy, the one who has refused to budge. And now he's arrived at the party.

Smith, Jessica

.net/YwotbKdP4sVunJGfdhmgww/e8f260a6-84bf-4222-a093-e1ef14e44c00/

Jen, did markets react to what the Bank of Japan did or to what they believe it signals for the future of monetary policy?

Hughes, Jennifer

It's a mix of the two. I don't think we can expect the BOJ to abandon their current policy and rush to follow the Fed and ECB in raising interest rates anytime soon. So you've got the governor, Haruhiko Kuroda, who is retiring next year. He has been adamant that inflation is only temporary. The government spent billions earlier this year meddling in currency markets to prop up the yen. So seeing this unexpected adjustment signals that the next Bank of Japan governor may modify policy more drastically, which would have a tremendous impact on Japanese markets.

Smith, Jessica

Jennifer Hughes is the FT's US markets editor.

Sam Banks-

Fried has signed extradition documents and is scheduled to return to the United States from the Bahamas. The former CEO of the collapsed bitcoin exchange FTX is facing fraud charges. Meanwhile, his former company has been slapped with a slew of litigation. The most recent legal action comes from a group of FTX clients who have a total of $1.6 billion invested in the bankrupt company. They want their money returned as soon as possible. Josh Oliver of the Financial Times joins us.

Oliver, Joshua

So, when this legal action is launched, what is crucial is that it is truly about the customers' assets and whether a large amount of all the money in play in this bankruptcy will be walled off and effectively given back to customers as soon as feasible. The question is, do these assets now belong to FTX, the now-bankrupt corporation, or do they still legally belong to the customers because they were the customers' assets all along and FTX just had them in custody? And this affects how the assets possessed by FTX and all of its connected entities are split among the other creditors.

Smith, Jessica

How do you anticipate the FTX crash affecting the broader cryptocurrency sector at this point?

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