Japanese Experience of 

 Non-Conventional Monetary Policy and Market Impact

June, 2013

Michio SAITO

Debt Management Policy Division

Financial Bureau

Ministry of Finance, Japan
○Amounts to be Purchased ○Frequency of Purchases 

 Approximately 7+ trillion yen per month Approximately 8-10 times (business days) per month 

○Bonds to be Purchased 

 Japanese government bonds with coupons (2-year bonds, 5-year bonds, 10-year bonds,

 20-year bonds, 30-year bonds, 40-year bonds, floating-rate bonds, and inflation-indexed bonds)

○Amounts to be Purchased from Specific Brackets Classified

 by Bond Type and Residual Maturity

 Amount outstanding of JGB holdings (91 tril. yen (March,2013))

 Annual increase : about 50 tril. yen

 Average remaining maturity of the Bank’s JGB purchases

 slightly less than 3 years -> about 7 years (6-8 years)

Outline of Government Bonds Purchases

by the Bank of Japan

(Source) Bank of Japan, 2013 1

Residual Maturity -1y 5-10y

Amounts to be

purchased (tril. yen) 0.22/month 2.7-3.6/month 0.14/month

(bimonthly)

0.02/month

(bimonthly)

(105.9-141.2%)

2y 5y 10y 30y 40y

28.8

(2.4/month)

6.8

(0.5-0.6/month)

 5-15y

Inflationindexed

bonds

Floating-rate

bonds

1.6

(0.4 × 4)

1.0-1.5/month

10y3.6

(0.3/month)

15-29y

Additional Off-the-Run Issue

14.4

(1.2/month)

(42.6-63.8%)

Bonds with coupons (excluding floating-rate bonds and inflation-indexed bonds)

(53.6%-75.0%)

3.0-4.2/month

1-5y

(Percent of issuance amount)

20y

3.6

(0.3/month)

34.8

(2.9/month)

32.4

(2.7/month)

Issuance Amount of the JGB

for FY2013 (tril. yen)
0.0

0.5

1.0

1.5

2.0

2.5

3.0

Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13

2

10-year Bond Yields in Major Countries

(Source) Bloomberg

U.S.

U.K.

Germany

Japan

June 11th, 2013

 U.S. 2.18%

 U.K. 2.17%

Germany 1.60%

Apr 4th, 2013 Japan 0.89%

(%)
3

JGB Yield Curves

(Source) Bloomberg
30-day Historical Volatility

4

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13

JGB Futures

5-year JGB

10-year JGB

(Source) Bloomberg

Apr 4th, 2013
5

Investment Activities of Main Japanese 

Investors

Super long-term bonds

Long-term bonds

Medium-term bonds

T-bills

Note.: Turnover figures represent transaction totals (excluding Gensaki transactions) by members (securities companies) or special members (registered

 financial institutions conducting dealing duties, etc.) of Japan Securities Dealers Association. Figures are calculated on a nominal basis.

-9.0

-7.0

-5.0

-3.0

-1.0

1.0

3.0

5.0

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

(Unit : trillion yen) City Banks

Net Purchase

Net Sale

2012 2013

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

(Unit : trillion yen) Regional banks

Net 

Purchase

Net Sale

2012 2013

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

Life and non-life insurance companies

Net Purchase

Net Sale

2012 2013

(Unit : trillion yen)

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

Foreigners

Net Purchase

Net Sale

2012 2013

(Unit : trillion yen)
Close and more frequent communication with market participants

Flexible market purchase operations

More flexibility for Securities Lending Facility (SLF)

Consideration of additional issuance of Off-the-Run JGBs in case of liquidity 

shortage

Modification of maturity composition in the annual issuance plan if necessary

Policy Measures by the BOJ & the MOF

6

The Bank of Japan

The Ministry of Finance