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BOJ says to expand its bond lending to deal with possible shortage
[TOKYO] The Bank of Japan said on Wednesday it would expand its bond lending scheme to reduce possible shortages of government bonds in the market, which could be exacerbated by the central bank's new policy to introduce negative interest rates.
The BOJ said it will increase the amount of JGBs it can lend to brokers and banks to one trillion yen per each issue, compared to 400 billion yen now.
The announcement came after yields on JGBs of up to 10 years to maturity fell below zero earlier this week following the BOJ's decision to put negative interest, or a charge, on a portion of deposits at the BOJ.
The BOJ is currently buying 8 to 12 trillion yen of JGBs per month, more than issued by the Ministry of Finance and thereby reducing the amount of bonds available to private investors.
After the BOJ started massive stimulus that consists of buying of JGBs and other assets, the BOJ has relaxed rules on bond lending several times.