![]() These devices do not pay interest, but they are sold at a discount and redeemed at full face value. The Ministry issues Treasury bills for 3 months, 6 months, and 1 year (minus one day). The Japanese government can just print its way out of financial difficulty because unlike the USA, Germany, France, Greece, or Italy, it owns the country’s central bank, the Bank of Japan.įinancing bills are also referred to by the Ministry of Finance as ‘Treasury bills’ - a name with which international investors will be familiar with.Īs with any typical government Treasury bill, the Financing Bill can have a maturity date of up to one year minus one day. Most of its debt is held within the country and so the government is unlikely to face problems financing the debt, which is denominated in Yen. The central government’s Ministry of Finance (Zaimu-shō) is tasked with managing Japan’s famously large national debt.Īlthough the level of the debt is noticeably high, the government of Japan does have some advantages over other greatly indebted nations. Who Is In Charge Of Japan’s National Debt? This pattern has now been repeated around the world and has become the standard policy to reflate an economy. When the 2008 crisis hit, the Bank of Japan just kept rolling with its liquidity plan and the national debt got even higher. This overhang of non-performing loans prevented banks from lending to new enterprises and effectively stopped the economy in its tracks.įrom 2001, the Bank of Japan introduced quantitative easing to flood the economy with liquidity, revitalizing commercial banks by swapping their bad loans for government-issued bonds. When the property crash came, the nation’s banks were left insolvent, carrying overvalued loans on their books that were backed by properties that kept falling in value. ![]() What Happened To Japan’s Economy After The Property Crash? The economic environment that the Japanese stoked in the 1980s can be seen repeated in over-supplied property markets in emerging economies such as China and Brazil. How Did The 80s And 90s Financial Crises In Japan Occur?Ī financial crisis in the late 1980s and early 1990s can be directly attributed to the government’s inability to soak up the excessive liquidity that was pumped into the economy during the post-war era.Īlthough inflation and large amounts of government financing for development helped to erode the national debt as a percentage of GDP, the excess of capital made loans cheap and created a property price bubble. ![]() ![]() How Did The National Debt Erosion Impact Foreign Income?Īt the same time, a mercantilist trade policy allowed the government to increase the country’s foreign currency income, which did not erode in value as quickly as the Yen.Įroding the national debt away with inflation became a classic government strategy that was implemented around the world with varying success. They correctly estimated that a post-war currency devaluation and increased inflation would erode the national debt. We discuss top imports, exports, overall GDP, GDP-per-capita, and how the country ranks globally in trade.ĭespite an already crippling debt, the government pushed even more bonds into the market. Learn more about Japan’s economy in our Economic Overview of Japan. ![]()
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