TOKYO Aug 14 The Bank of Japan's holdings of
government bonds exceeds its self-imposed cap when bonds taken
up under its asset-buying programme are included, a sign that
its ultra-easy monetary policy is drawing it closer to
bankrolling public debt.
The balance of the BOJ's government holdings totaled 80.97
trillion yen ($1.03 trillion) as of Aug. 10, exceeding the 80.79
trillion yen worth of bank notes in circulation, data released
by the central bank showed on Tuesday.
With interest rates virtually at zero, the BOJ created a
pool of funds in October 2010 to buy assets ranging from
government bonds to private debt to nudge down borrowing costs
and support a fragile economy.
The central bank has topped up the asset-buying fund several
times, with the target now at 45 trillion yen, of which 29
trillion yen is set aside for purchases of government bonds by
the end of June 2013.
The BOJ also buys 21.6 trillion yen in government bonds
annually under a separate market operation to funnel long-term
funds to the economy.
Wary of giving markets the impression it is monetising debt
and making a future exit from ultra-easy policy difficult, the
BOJ has in place a self-imposed rule limiting the balance of its
bond holdings to the value of bank notes in circulation.