Bloomberg News

Shirai Signals BOJ Bond Buying Could Be Risk to Financial System

May 10, 2012

The Bank of Japan’s growing purchases of government debt may pose risk to the stability of financial markets, a central bank board member indicated.

“That may be an issue,” board member Sayuri Shirai said today at a press conference in Akita, northern Japan. She was responding to a question about whether excessive BOJ purchases of public bonds could destabilize the financial system by affecting yields. “The BOJ has been buying a considerable amount of bonds from the market as a result of its monetary easing.”

The central bank has twice this year pledged to buy more government debt through the asset-purchase program, its main policy tool. It said this week that its holdings of government debt will probably exceed banknotes this year, an indication of its growing stake in the world’s largest public debt market.

To contact the reporters on this story: Masahiro Hidaka in Tokyo at mhidaka@bloomberg.net; Toru Fujioka in Tokyo at tfujioka1@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net


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