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Bank of Japan hits new high with ¥449 trillion in government debt in Q4'17

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Bank of Japan hits new high with ¥449 trillion in government debt in Q4'17

The Bank of Japan held a record ¥449 trillion in government debt for the quarter ended December 2017, hitting a new record as concerns grow its bond market dominance is sapping liquidity.

Year on year, fourth-quarter 2017 holdings were up 6.8% to 41.1% of all Japanese government debt in circulation, the highest level ever, according to Reuters. Insurance and pension funds held ¥236 trillion of government debt in the last quarter of 2017, while depository corporations held ¥183 trillion.

Japan's central bank has slowed its bond purchases since it switched its policy benchmark in September 2016, setting a yield target for the 10-year bond, but its dominance in the market has reduced liquidity, pushing other investors out, analysts have said. No benchmark 10-years were traded at all March 14, The Wall Street Journal reported.

In a recent BOJ meeting, some members called for a closer monitoring of the cost of the central bank's ultra-easy monetary policy while one member highlighted the need to pay "due attention" to the impact of the flattening of the yield curve for U.S. Treasurys.

As of March 16, US$1 was equivalent to ¥106.11.