Summit Notebook

Exclusive outtakes from industry leaders

When debt monetisation makes sense

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If push comes to shove and Japan runs into difficulties finding buyers for its low-yielding government bonds, a little debt monetisation — a dirty word for central banks — would not be a bad thing.

Tomoya Masanao, managing director and head of Japan portfolio management at PIMCO, told the Reuters Rebuilding Japan Summit that if private investors are not willing to buy JGBs, then the central bank should fill the breach.

“If the Japanese private sector does not have enough ability to fund the government, it’s natural that the central bank should step in,” Masanao said.

Such a move would weaken the currency, and that would be a positive for an economy that is now grappling with a strong yen on top of the many other economic challenges it is facing.

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