By SHINYA TOKUSHIMA/ Staff Writer
December 19, 2022 at 17:33 JST
The Bank of Japan now holds more than 50 percent of government bonds. (Asahi Shimbun file photo)
For the first time ever, the Bank of Japan holds just over half of all government-issued bonds, data released by the central bank on Dec. 19 reveals.
Analysts have expressed growing alarm about the steady increase in the BOJ's share of bonds over the past decade, which has been an extremely unusual development for a central bank of a major economy.
They have pointed out that although the central bank is supposed to be an independent institution, its monetary policy has become effectively integrated into the government’s fiscal policy.
The bank said as of the end of September, it owned 536 trillion yen ($3.93 trillion) of the government’s outstanding bond balance of 1,066 trillion yen.
The share, now 50.26 percent, is up more than four-fold from the 11.48 percent it owned in 2013, after Prime Minister Shinzo Abe took office.
The bank began buying up massive amounts of bonds after its monetary easing policy started in April 2013 under Haruhiko Kuroda, a former senior official with the Finance Ministry, who took the helm as the BOJ governor with Abe's backing.
Its outstanding bond holdings have continued to balloon since it stuck to its guns on its monetary easing policy even as its foreign counterparts began raising interest rates this spring to fight inflation.
The BOJ has its targets set on maintaining a long-term interest rate lower than around 0.25 percent, so it bought up tons of bonds to rein in interest rates and prop up the Japanese economy.
The BOJ bought a monthly record of 16 trillion yen in long-term government bonds in June. In September, the figure stood at nearly 12 trillion yen.
But the bank’s strategy has drawn fire as critics argue it is effectively monetizing debt by bankrolling the government’s fiscal deficits.
And Japanese leaders have grown less eager to restore any sense of fiscal discipline since the monetary easing program began. Kuroda's term as BOJ governor ends in April.
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