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View all search resultsThe Japanese government will issue around 11 trillion yen (US$70 billion) in additional bonds to help fund an economic package, even as its tax revenue for this fiscal year is expected to rise to a record high.
While the burden sharing scheme was an apt instrument during the COVID-19 pandemic, it now risks becoming a fiscal dominance policy, blurring the line between fiscal and monetary policy, accelerating depreciation, eroding market trust and undermining the central bank's independence.
The central bank has announced a continuation of its burden-sharing scheme with the government and has purchased trillions of rupiah worth of government bonds this year, but an economist questions the legal basis for continuing a policy initially intended as a crisis response.
According to the World Bank, the introduction of the SRBI has had unintended consequences of crowding out government borrowing, as commercial banks have reduced their holdings of government securities and turned toward BI’s new securities.
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