The BOJ is prohibited by law from buying foreign bonds for the explicit purpose of influencing currency rates, as exchange rate policy falls under the jurisdiction of the finance ministry.
But some academics have proposed that the BOJ could buy them if doing so was aimed at pump-priming the economy, an idea the central bank has dismissed so far because it would be hard to convince Tokyo's G20 counterparts that Japan wasn't trying to weaken the yen.
"Under the BOJ law, the finance ministry holds jurisdiction over currency policy. But I hope Kuroda would consider having the BOJ buy foreign bonds," Koichi Hamada, an emeritus professor of economics at Yale University, told Reuters in an interview on Thursday.
Hamada said while the central bank cannot buy bonds for the sake of affecting exchange rates, it could do so "as a means for delivering proper monetary policy for Japan."
In the near-term, however, there are limits to what the BOJ can do to prevent sharp yen rises from derailing Japan's economic recovery, said Hamada, who meets Abe regularly and retains close contacts with Kuroda.
The government last week reappointed Kuroda for another term and chose an advocate of bolder monetary easing as one of his two deputies, a sign policymakers are in no rush to turn off a sweeping stimulus programme.
The announcement did little to reverse the yen's recent rises against the dollar, which has drawn verbal warnings by Japanese policymakers worried of the pain a strong yen could inflict on an export-reliant economy.
"The yen rose after the announcement of the government's BOJ nominees," Hamada said. "There's a limit to how much monetary easing can keep yen rises in check."
Hamada, who lives in the United States, conducted the interview over the phone and email exchanges with Reuters.
TOOL OF LAST RESORT
Under its huge asset-buying programme which is intended to help boost inflation to its 2 percent target, the BOJ has been buying government bonds and risky assets such as exchange-traded funds.
But, years after the radical plan was launched, inflation has hardly budged, even as the Japanese economy has seen its longest continuous expansion since the 1980s boom.
Critics say the BOJ's buying has dried up bond market liquidity and caused distortions in the stock market, leaving the central bank with little ammunition to stave off external shocks to the economy such as the hit from a strong yen.
The buying of foreign bonds by the central bank has been floated as a possible idea by some academics in the past as a way to counter such external shocks.
If the BOJ runs out of domestic assets to buy, it could purchase foreign bonds from financial institutions in exchange for yen cash.
That would give banks more funds which they could loan out to companies and households, whose spending would percolate through the broader economy and spur growth, proponents of the idea say.
But the more direct effect in accelerating inflation would be to raise the cost of imports by weakening the yen.
That means Tokyo may face criticism from its G20 counterparts that it is engaging in currency manipulation, which is why many Japanese policymakers are cautious of the idea.
Still, the BOJ's dwindling tool-kit may mean the idea will remain an option for central bankers desperate for means to fend off external shocks to the economy, some analysts say.
"The BOJ is already buying various assets, so it won't be surprising for the idea of buying foreign bonds to emerge," said Nobuyasu Atago, a former BOJ official and chief economist at Okasan Securities.
"If the economy slides into recession, the BOJ may consider buying foreign bonds given its limited policy options."
(Additional reporting by Yoshifumi Takemoto, Writing by Leika Kihara; Editing by Shri Navaratnam and Kim Coghill)
By Leika Kihara and Kaori Kaneko