Japan: JGB purchases from perspective of BOJ balance sheet

Research evidence excerpt

Japan: JGB purchases from perspective of BOJ balance sheet

Japan: JGB purchases from perspective of BOJ Global Markets Research

balance sheet 10 July 2026

Economics - Japan

Research AnalystsSustained monthly purchases of ¥2trn make

Japan Economicssense

Uichiro Nozaki - NSC

Rethink of pace of JGB purchases might happen around 2030 uichiro.nozaki@nomura.com

+81 3 6703 1284

The BOJ decided to halt its tapering program for JGB purchases in 2027 Q1 and persist Kyohei Morita - NSC

with monthly purchases of around ¥2trn from April 2027 at its June 2026 Monetary Policy kyohei.morita@nomura.com

Meeting (MPM). As one of the main reasons given for this decision was the stability of the +81 3 6703 1395

JGB market, some market participants have labeled it fiscal financing.

That said, if we assume that central bank purchases of government bonds are one way of

supplying currency, we do not think that sustained JGB purchases of around ¥2trn are at

odds with this underlying goal.

In this report, we look at the size of the BOJ's balance sheet, the significance of sustained

monthly JGB purchases of around ¥2trn, and points to watch in the future. Our main

conclusions are as follows.

• The BOJ ultimately needs to continue holding some assets in order to supply currency

(banknotes, current account deposits). With loan support programs and ETF/REIT

holdings in a contraction phase, long-term JGB purchases are currently its main

means of effecting sizeable adjustments to its balance sheet. To that extent, we think

it still makes sense for the BOJ to continue purchasing JGBs at some level.

• The appropriate size of the balance sheet is mainly determined by the liability side, in

particular the required amount of current account deposits. While a reduction in