To: UncleBigs who wrote (73289 ) 10/31/2006 7:49:05 PM From: regli Read Replies (1) | Respond to "doesn't the Bank of Japan own most of Japan's government debt? In other words, hasn't their central bank monetized the bulk of their debt and they essentially owe it to themselves?" japanreview.net "...However, in addition to interest payments, a number of economists also acknowledge the growing question of Japan's redemption costs. In contrast to most other advanced countries, the redemption system for Japanese Government Bonds, or JGBs, is based on the use of sinking debt funds that distinguish between new bonds and refinancing bonds.Japan's system requires JGBs to be completely redeemed in cash over a 60 year period irrespective of bond duration. These cash redemptions are required to be paid from sources other than refinancing bonds. For example, if ¥60bn-worth of 10-year JGBs were issued, ¥10bn would be subject to cash redemption 10 years later, with a ¥50bn balance redeemable through refinancing bonds; 10 years later, an additional ¥10bn would be subject to cash redemption, with a ¥40bn balance redeemable through refinancing bonds and so forth. The process continues until the ¥60bn of 10-year JGBs are completely redeemed through legitimate tax revenue sources. As government retained revenue is the final payable source of all its expenditures, the Ministry of Finance continues to look for ways to strengthen its debt management policies.
