Title: Japanese Government Bond (JGB) Definition
Headings: Japanese Government Bond (JGB)
Japanese Government Bond (JGB)
What Is a Japanese Government Bonds (JGB)?
Understanding Japanese Government Bonds (JGBs)
Special Considerations
Japanese Government Bonds (JGBs) vs. U.S. Treasuries

Content: General bonds, such as construction bonds and debt financing bonds. Fiscal Investment and Loan Program (FILP) bonds, which can be used to raise funds for the investment of the Fiscal Loan Fund. Subsidy bonds. Special Considerations
A decline in liquidity in the JGB market has been observed in recent years due to the aggressive monetary actions of the central bank—The Bank of Japan (BoJ). Since 2013, the Bank of Japan has been buying up billions of dollars of Japanese government bonds, flooding the economy with cash in an effort to propel the country’s low annual inflation rate toward its 2% target by keeping long-term interest rates at around 0%. To maintain the yield on 10-year JGBs at zero, a rise in the yield of these bonds triggers a buy action from the BoJ.
As of 2019, the central bank owns over 40% of Japanese government bonds. There is an inverse relationship between interest rates and bond prices, which are dictated by supply and demand in the markets. Heavy buying of JGBs increases demand for the bonds, which leads to an increase in the price of the bonds. The price increase forces down the bond yield, an essential element of the central bank’s ultra-loose yield curve control (YCC) policy, which was designed to help increase the profits that Japanese banks could earn from lending money. The Bank of Japan implemented the yield curve control in 2016 in an effort to keep the yield on its 10-year JGB at zero and to steepen the yield curve.