Japan's debt trap: How far is too far?

The Bank of Japan was a pioneer in the use of unconventional policies – called financial repression. Since 2001, it has applied them numerous times in a bid to boost its economy. But financial repression comes with a high cost for households and long-term investors such as insurance companies, as outlined in our new fact sheet, Japan's debt trap: How far is too far?

Between 2008-2014, Japanese households lost an enormous USD 900 billion in foregone interest rate income as a result of financial repression. During the same period, Japanese insurers experienced a hit of USD 230 billion to their yield income. As long-term investors, this results in less risk capital available to be put to work in the real economy. Ultimately, financial stability is put at risk.

The exit from such an ultra-abundant liquidity environment is going to be challenging – not only for Japan, but also for the other major central banks around the world which adopted unconventional policies following the 2008 financial crisis.

Please download the fact sheet, Japan's debt trap: How far is too far?, for an analysis of Japan's debt situation and the consequences.

Published 8 October 2015

Supporting financial resilience

Re/insurance supports financial resilience by acting as a shock absorber and promoting growth through its core businesses. This is particularly important in a challenging and volatile macro-economic environment.

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