BOJ to switch 2.5 trillion yen of gov’t bonds in FY 2018

December 21, 2017

Tokyo- The Bank of Japan is planning to switch 2.5 trillion yen of maturing government bonds it holds to short-term government securities in fiscal 2018 without redeeming them, Jiji Press learned Wednesday.

The figure is down 500 billion yen from fiscal 2017, which ends in March, falling for six straight years and hitting the lowest level since fiscal 1997, when the central bank acquired 2 trillion yen of short-term securities in a similar way.

By curbing the figure, the BOJ aims to mitigate criticism that the bank is financing fiscal deficits.

The bank's latest plan will be included in the government's fiscal 2018 bond issuance program to be released on Friday.

The BOJ has been slashing the amount of short-term government securities it acquires using the switching method to ensure its monetary policy flexibility.

The ministry accepted the bank's latest plan because of an estimated decrease in the total amount of government bonds to be issued in fiscal 2018.

The BOJ purchases government bonds as part of its monetary easing policy.

The finance law prohibits the BOJ from acquiring bonds directly from the government. But the bank is allowed to switch matured bonds to short-term government securities as an exceptional case. Jiji Press