ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon Print

Negative rates cause rift between government, banks

TOKYO -- Bank of Tokyo-Mitsubishi UFJ's decision to quit as a primary dealer of Japanese government bonds highlights how negative interest rates have driven a wedge between the government and banks in the sovereign bond market.

Private-sector banks used to purchase Japan's growing national debt, which the Bank of Japan would then take off their hands as needed to stabilize the market. But the central bank has been snapping up massive amounts of Japanese government bonds lately and even introduced negative rates in February. The BOJ hopes that lowering yields on JGBs would lead to lower borrowing rates for households and companies, which in turn would bolster the economy.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

Discover the all new Nikkei Asia app

  • Take your reading anywhere with offline reading functions
  • Never miss a story with breaking news alerts
  • Customize your reading experience

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more