Bank of Japan Bonds Reach 80.7 Percent of a Balance Sheet Down 10.9 Percent in a Year

By The Edge Research Team

The Bank of Japan held 644.27 trillion yen of assets on 10 September, the last account it published before its policy meeting on 17 and 18 September. The figure was released on Monday. It is 10.9 percent below the 723.42 trillion yen held on the same date in 2025 and 15.7 percent below the 764.50 trillion yen of September 2024, on our calculation.

Government bonds did most of that shrinking. Holdings of Japanese government securities stood at 519.63 trillion yen against 571.31 trillion a year earlier, a fall of 51.68 trillion yen. That single line accounts for 65.3 percent of the 79.15 trillion yen decline over the year, on our calculation.

The bond share has risen even as the bond pile has fallen

Accounts at the second ten day reporting point of each September. Levels as published. Shares are our calculation.

The share column is the part worth pausing on. The Bank is holding fewer bonds in absolute terms than at any point in this run, yet they make up a larger share of its assets than in any of the three preceding years. In the past year the rest of the asset side fell 18.1 percent against 9.0 percent for the bonds, on our calculation, which is what lifts the share. Within the securities line, treasury discount bills are at zero: the entire 519.63 trillion yen is government bonds.

Loans, excluding those to the Deposit Insurance Corporation, stood at 71.86 trillion yen, 11.2 percent of assets, of which 39.11 trillion, or 54.4 percent, sits under the Bank’s Loan Support Program. Exchange traded funds held in trust were 36.97 trillion yen, 5.7 percent of assets. Foreign currency assets were 11.97 trillion, corporate bonds 1.27 trillion and Japanese real estate investment trusts held in trust 0.65 trillion. All three shares are our calculation.

Six weeks of almost nothing

Accounts published every ten days. Levels as published.

Against the scale of the annual decline, the run into the meeting is flat. The latest reading is 0.39 trillion yen below the end of August, a fall of 0.06 percent, and the whole six week range spans 1.69 trillion yen, or 0.26 percent of the balance sheet, on our calculation. Whatever is decided this week, it is not arriving on the back of a sudden move in its own accounts.

On the liability side, current deposits held by financial institutions were 412.66 trillion yen, 64.0 percent of the total, and banknotes in circulation 114.48 trillion, 17.8 percent. Against all of that sits capital of 100 million yen. Adding provisions of 10.96 trillion and legal and special reserves of 3.87 trillion brings total buffers to 14.83 trillion yen, equal to 2.30 percent of the balance sheet, on our calculation.

Why it matters: the pace is the story rather than the direction. On the September readings the balance sheet was still 2.2 percent larger in 2024 than in 2023, fell 5.4 percent to 2025 and 10.9 percent to 2026, on our calculation, so the contraction has doubled in speed in a year. The composition matters for what comes next: with treasury bills at zero, government bonds are 80.7 percent of assets, the highest share in the four Septembers. The release publishes no maturity profile, so the runoff schedule cannot be read from it. Provisions and reserves come to 2.30 percent of the balance sheet, though how much loss they would absorb depends on accounting treatment the account does not set out.

Outlook: the policy meeting on 17 and 18 September carries no Outlook Report, so the statement and the balance sheet path are what there is to read. Japan’s national consumer price index for August follows on 18 September, the same day the decision lands. The next ten day account, for 20 September, will show whether the flat six week run continues past the meeting.

Sources: Bank of Japan, Statistics Bureau of Japan.

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