Commentary
Over the past three decades, Japan’s monetary policy has been characterized by near-zero interest rates and significant quantitative easing, aimed at countering persistent deflation and stimulating economic growth. The outcome of decades of accommodative policies has resulted in the accumulation by the Bank of Japan (BOJ) of a balance sheet equivalent to 125 percent of Japan’s GDP—a ratio that surpasses that of any other major central bank. Japanese government bonds (JGBs) dominate the balance sheet, accounting for more than three-quarters of the total; more than half of Japan’s outstanding government debt is held on the BOJ’s balance sheet.
