According to reports by Nikkei, the Bank of Japan held 50.4% of all Japanese government bonds as of the previous day, exceeding 50.0% recorded in February and March last year.
In 2013, when Haruhiko Kuroda, governor of the Bank of Japan, began massive financial easing, the ratio was only in the 10% range.
The Bank of Japan maintains a large-scale financial easing in which short-term interest rates are frozen at -0.1%, and long-term government bonds with no upper limit to induce 10-year government bond rates, an indicator of long-term interest rates, to around 0%.
The Bank of Japan is buying unlimited government bonds to curb the long-term interest rate to around 0.25 percent, which is set at the upper limit.
The Bank of Japan is buying large amounts of government bonds to curb interest rates amid rising interest rates in the U.S. and Europe.
The purchase amount reached 14.8 trillion yen (about 141 trillion won) this month alone, surpassing the monthly high of 11.1 trillion yen recorded in November 2014. Purchases are expected to reach 15.9 trillion yen by the end of the month.
According to an analysis by the Japan Economic Research Center, if the Bank of Japan continues to curb long-term interest rates to 0.25%, the balance of government bonds could increase by an additional 120 trillion yen as of the end of March, the newspaper said.
Private financial institutions are reducing the ratio of government bonds, and the Bank of Japan is taking charge of the risk of losses due to rising long-term interest rates (falling government bond prices).
The Bank of Japan’s share of government bonds is very high compared to other countries.
As of the end of March this year, the Federal Reserve, the U.S. central bank, held 20% of government bonds, and the European Central Bank (ECB) held 30% recently.
Nikkei pointed out that the situation in which the Bank of Japan holds more than half of its government bonds can be accepted as loosening fiscal discipline and the central bank filling the deficit budget.
