Citing the latest data from the Japanese Bankers Association, Bloomberg reported on Tuesday, the country’s banks could suffer losses on their government bonds to the tune of $1.1 trillion should the Bank of Japan (BoJ) loosen its grip on 10-year JGB yields.
“Japan’s financial regulator is examining how vulnerable lenders would be to a sudden slump in government bonds should the nation’s central bank pivot away from its ultra-loose monetary policy in future,” per Bloomberg.
Earlier this month, BoJ Deputy Governor Masayoshi Amamiya said that the central bank could incur an unrealized loss of JPY28.6 trillion ($211 billion) on its holdings of Japanese government bonds if yields rise by 1%,
Market reaction
USD/JPY is off the highs, defending gains at around 137.80, at the time of writing.
