TOKYO — The Bank of Japan is rapidly increasing its lending of government bonds to financial institutions facing difficulty acquiring securities as the central bank’s own massive asset purchases deplete the supply.
The central bank lent just over 3.9 trillion ($34.2 billion) in Japanese government bonds through its securities lending facility in February, an unprecedented scale over 13 times the level seen a year before.
The Bank of Japan held roughly 40% of outstanding JGBs as of the end of January — far more than the slightly over 10% it held in April 2013, just before it introduced its unprecedented scale of quantitative and qualitative monetary easing. The JGB lending spike illustrates how the central bank’s monetary policy has distorted the market.
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