The Bank of Japan has become the single biggest holder of domestic government bonds for the first time, data showed yesterday, underscoring the scale of its monetary easing program.
The central bank has been aggressively buying Japanese government bonds since unveiling a stimulus scheme in April last year as part of Tokyo’s wider bid to kickstart the world’s No. 3 economy.
Data supplied by the central bank showed it had edged out the insurance sector to hold ￥201 trillion (US$1.97 trillion) in Japanese government bonds, or 20.1 percent of the total, at the end of March.
Insurers collectively held 19.3 percent of Japan’s outstanding debt. Pension funds and individuals were among the other holders of the country’s low-yielding government debt.
The vast majority of the government’s debt is held domestically, which is why Japan has not faced the same kind of pressure from foreign creditors as Greece and other nations did at the height of the eurozone debt crisis two years ago.
However, the IMF has led calls for Japan to tame its public debt — one of the world’s heaviest burdens at more than twice the size of the economy.
Tokyo is grappling with the spiraling healthcare and social security costs in a rapidly ageing nation.
In a bid to boost Japan’s US$1.26 trillion public pension fund — the world’s biggest — Tokyo is eyeing a shift away from a bond-heavy portfolio into stocks and other riskier assets in search of higher returns.
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