TOKYO -- The Bank of Japan has set out to unwind its decadelong ultra-easing program, putting Japanese government bonds at the gradual risk of a downgrade. If interest rates rise as a result of the BOJ abandoning its yield-curve control (YCC), concerns about the country's public finances would intensify, eventually affecting Japanese banks' ability to acquire foreign currency and Japanese companies from further expanding overseas.
"BOJ officials always talked about not wanting to end up like the U.K. and the Truss shock," an executive at a major Japanese bank said, referring to how markets reacted to Liz Truss, a U.K. prime minister who earlier this year lasted only six weeks in office.
