A draft proposal reviewed by Reuters:
- Japan must create an environment where government bonds remain an attractive investment for financial institutions, such as by issuing shorter-duration debt, a finance ministry panel is likely to say
- the Bank of Japan's exit in March from its radical stimulus is prodding the government to prepare for an era of rising interest rates, which will increase the cost of funding the country's huge public debt
- The BOJ also decided last week to start tapering its huge bond buying and reduce its holdings which, at 589 trillion yen ($3.7 trillion), make up roughly half of total Japanese government bonds (JGB) sold in the market. The diminishing presence of the BOJ heightens the need for the government to find stable buyers of JGBs and avoid a bond selloff that could trigger a damaging spike in yields.
Info via Reuters report.
Trying to dig up a link. The policy adjustment at the BoJ and the likely moves on JGBs from the MoF are aa seismic shift in Japan's financial landscape.
