Assessing the Risks to the Japanese Government Bond (JGB) Market

December 1, 2011

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Format: Chicago

Waikei R Lam, and Kiichi Tokuoka. Assessing the Risks to the Japanese Government Bond (JGB) Market, (USA: International Monetary Fund, 2011) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Despite the rise in public debt, Japanese Government Bond (JGB) yields have remained low and stable, supported by steady inflows from the household and corporate sectors, high domestic ownership of JGBs, and safe-haven flows from heightened sovereign risks in Europe. Over time, however, the market's capacity to absorb new debt will likely shrink as population ages and risk appetite recovers. In the short term, a decline in fund supply from the corporate sector, where financial surpluses are abnormally high, and spillovers from global financial distress could push up JGB yields. Fiscal reforms to reduce public debt more quickly and lengthen the maturity of government bonds will help limit these risks.

Subject: Banking, Corporate sector, Credit default swap, Economic sectors, Financial institutions, Government securities, Loans, Money, Public debt

Keywords: Corporate sector, Credit default swap, Financial Distress, Fiscal Sustainability, Global, Government securities, Government yields, JGB cash market, JGB CDS contract, JGB holding, JGB market, JGB sell-off, JGB yield, Loans, Maturity JGBS, Sovereign Risk, WP, Yield

Publication Details

Pages:

19
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/292
Stock No:

WPIEA2011292
ISBN:

9781463927264
ISSN:

1018-5941

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