BOJ Owns Record 52.02 Pct of Outstanding JGBs

Tokyo, March 17 (Jiji Press)--The Bank of Japan held a record 52.02 pct of outstanding Japanese government bonds at the end of December, reflecting the central bank’s massive JGB purchases under its monetary easing policy, BOJ data showed Friday.

The BOJ owned 547 trillion yen of the 1,051 trillion yen in outstanding JGBs, excluding treasury discount bills, according to the central bank’s quarterly flow of funds data.

Including treasury discount bills, JGBs held by overseas entities fell 5.7 pct from a year before to 166 trillion yen, down for the first time in 35 quarters. This is because the BOJ conducted money market operations to buy unlimited amounts of JGBs at fixed yields.

The BOJ’s aggressive JGB purchases have dried up liquidity, creating distortion in the price formation of the bond market. The central bank has not been able to correct the distortion despite its policy tweak last December to raise its cap on the benchmark 10-year JGB yield.

The flow of funds data also showed that the balance of financial assets held by households in Japan at the end of December rose 0.4 pct from a year before to a record 2,023 trillion yen. The rate of increase was the slowest since the end of March 2020 as higher prices inflated people’s expenditures.

[Copyright The Jiji Press, Ltd.]