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

_IMF Working Papers, December 1, 2011_

## Source details

**Canonical URL:** [Assessing the Risks to the Japanese Government Bond (JGB) Market](https://www.imf.org/en/publications/wp/issues/2016/12/31/assessing-the-risks-to-the-japanese-government-bond-jgb-market-25435)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/31/assessing-the-risks-to-the-japanese-government-bond-jgb-market-25435/index.md)
- [Structured JSON version](/en/publications/wp/issues/2016/12/31/assessing-the-risks-to-the-japanese-government-bond-jgb-market-25435/index.json)
- [Bundle manifest](/en/publications/wp/issues/2016/12/31/assessing-the-risks-to-the-japanese-government-bond-jgb-market-25435/bundle-manifest.json)

## Bibliographic details
- Authors: Waikei R Lam, Kiichi Tokuoka
- Published: December 1, 2011
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781463927264.001

---

### Overview / Main findings
- Despite the rise in public debt, Japanese Government Bond (JGB) yields have remained low and stable.
- Factors supporting low and stable JGB yields:
  - steady inflows from the household and corporate sectors
  - high domestic ownership of JGBs
  - safe-haven flows from heightened sovereign risks in Europe
- Over time, the market's capacity to absorb new debt will likely shrink as population ages and risk appetite recovers.

### Short-term risks
- A decline in fund supply from the corporate sector, where financial surpluses are abnormally high, could push up JGB yields.
- Spillovers from global financial distress could push up JGB yields.

### Long-term risks and structural pressures
- Population aging is expected to reduce the market's capacity to absorb new debt.
- Recovery in risk appetite (relative to current safe-haven conditions) would reduce demand pressures that have supported low JGB yields.

### Policy recommendations and mitigation measures
- Fiscal reforms to reduce public debt more quickly.
- Lengthening the maturity of government bonds to help limit JGB market risks.

### Subject areas and keywords
- 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

---

## Content in this bundle

- **Microsoft Word - DMSDR1S-#4610348-v9-Japan_-_2011__Nov__-_Working_Paper_-_JGB_Risks__KT-RL_.doc**
  - [Microsoft Word - DMSDR1S-#4610348-v9-Japan_-_2011__Nov__-_Working_Paper_-_JGB_Risks__KT-RL_.doc (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2011/_wp11292.pdf.md){rel="alternate" type="text/markdown"}
  - [Microsoft Word - DMSDR1S-#4610348-v9-Japan_-_2011__Nov__-_Working_Paper_-_JGB_Risks__KT-RL_.doc (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2011/_wp11292.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/assessing-the-risks-to-the-japanese-government-bond-jgb-market-25435_