Friday, March 19, 2004

BOJ's JGB balance exceeds 100 trillion yen

The balance of Japanese government bonds held by the Bank of Japan has topped 100 trillion yen for the first time, BOJ officials said Thursday.

The findings show the balance has nearly doubled since the central bank introduced its quantitative credit-easing policy on March 19, 2001, the officials said.

The BOJ currently buys outright government bonds worth 1.2 trillion yen from financial institutions every month to inject ample liquidity into the financial system.

According to BOJ officials, the outstanding balance of JGB holdings by the BOJ totaled 55 trillion yen shortly before the bank adopted the current policy framework.

The sharp increase in bond holdings may trigger concerns over the health of the BOJ's finances when long-term interest rates start rising in line with waning deflationary pressure in the world's second-largest economy, financial analysts said.

It may also make it increasingly difficult for the BOJ to find a good landing point in the so-called exit strategy to a conventional interest rate policy.

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The Japan Times

Article 4 of 6 in Business news

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