Table of Contents
This service uses statistical data published by the Bank of Japan, but the content of this service is not guaranteed by the Bank of Japan.
This service uses statistical data published by the Bank of Japan, but the content of this service is not guaranteed by the Bank of Japan.
According to the Statements of Account published today for end-February 2026, the Bank of Japan's total assets stood at ¥683.8 trillion, up ¥0.9 trillion from the prior month. JGS holdings were ¥546.7 trillion, an increase of ¥1.1 trillion (10,972億円) month-on-month, but the 12-month cumulative change was a decline of ¥41.8 trillion, indicating an acceleration of passive QT compared with the prior month (¥40.0 trillion decline). Current account balances (当座預金) were ¥461.1 trillion, down ¥7.0 trillion (70,222億円) month-on-month, and the current account/total assets ratio fell to 67.4%. This note focuses on balance sheet structural changes, analyzing both QT flows and stock effects.
JGS holdings at end-February 2026 were ¥546.7 trillion, an increase of ¥1.1 trillion (10,972億円) month-on-month. This monthly increase is broadly in line with January 2026's month-on-month rise of ¥1.2 trillion (11,876億円), marking a second consecutive month of modest ¥1-trillion-class increases.
Looking at month-on-month changes over the past 12 months, a clear seasonality emerges with substantial declines concentrated in quarter-ends (March, June, September, December). Specifically, there were declines of ¥12.6 trillion in March 2025, ¥13.2 trillion in June, ¥14.9 trillion in September, and ¥15.4 trillion in December 2025, showing an expanding reduction at each quarter-end. In contrast, non-quarter-end months have seen only small monthly moves on the order of ¥1–3 trillion.
The 12-month moving sum of month-on-month JGS changes stood at -¥41.8 trillion at end-February 2026, an acceleration of ¥1.8 trillion from the prior month (-¥40.0 trillion). This 12-month cumulative is an important indicator of the passive QT annual pace; under the BOJ's policy of not reinvesting redemptions, it quantifies the natural pace of JGS holdings reduction.
Reviewing recent history, the 12-month cumulative first reached -¥40.0 trillion at end-January 2026 and widened to -¥41.8 trillion by end-February 2026. This arithmetic acceleration reflects the fact that the month-on-month +¥2.9 trillion in February 2025 dropped out of the 12-month sum while the month-on-month +¥1.1 trillion in February 2026 was newly included.
Total assets were ¥683.8 trillion, a small month-on-month increase of ¥0.9 trillion (9,025億円). Over the past 12 months total assets have declined from ¥744.3 trillion at end-January 2025 by ¥60.5 trillion (8.1%), indicating a continued downtrend in the overall balance sheet.
Monthly movements show, as with JGS holdings, that large declines are concentrated in quarter-ends. Total assets fell ¥17.3 trillion in March 2025, ¥16.1 trillion in June, ¥28.2 trillion in September, and ¥20.2 trillion in December.
The share of JGS holdings in total assets was 80.0% at end-February 2026. This level is relatively high within the past 12 months and represents a 1.3 percentage-point increase from 78.7% at end-January 2025.
On a monthly basis, the JGS share rose gradually from 78.7% in January 2025, reached 80.0% in September 2025, peaked at 80.3% in December 2025, fell slightly to 79.9% in January 2026, and returned to 80.0% in February.
This structural rise in the JGS share reflects that the pace of JGS reduction (annual -¥41.8 trillion) has been slower than the pace of total asset contraction (annual -¥60.5 trillion). In other words, non-JGS asset items—primarily loans outstanding—have been shrinking faster, increasing the relative weight of JGSs.
The ratio of policy assets (the sum of ETF, J-REIT, and corporate bond holdings) to total assets was 5.9% at end-February 2026. This level has been broadly stable over the past 12 months, remaining within a 5.7%–6.0% range.
Breaking this down, ETF holdings were ¥37.2 trillion (5.4%), with small declines of ¥5.3 billion (53億円) in January 2026 and ¥25.6 billion (256億円) in February 2026, leaving the overall level essentially flat. J-REIT holdings were ¥0.7 trillion and corporate bonds ¥2.4 trillion, both without material changes.
The stability of the policy asset ratio alongside a rising JGS share suggests that loans outstanding have been the main adjustment valve in the balance sheet reduction process.
Loans outstanding were ¥83.5 trillion (12.2%), essentially unchanged month-on-month. However, over the past 12 months loans have contracted from ¥101.6 trillion at end-January 2025 by ¥18.1 trillion (17.8%), making them a major driver of total asset reduction.
Monthly patterns show loans tend to decline substantially at quarter-ends: -¥4.8 trillion in March 2025, -¥2.2 trillion in June, -¥12.9 trillion in September, and -¥3.9 trillion in December, implying adjustments linked to fluctuations in financial institutions' funding needs at quarter-ends.
A 12-month cumulative of -¥41.8 trillion as an annual QT pace exceeds the BOJ's July 2024 indicated pace of roughly ¥3.0 trillion per month (about ¥36 trillion annually). This suggests that either redemptions have been larger than expected or reinvestment adjustments have occurred.
The pattern of large quarter-end declines reflects concentration of JGS redemptions at quarter-ends. December 2025's -¥15.4 trillion was the largest 12-month decline, and the tendency for declines to widen at each quarter-end suggests an increase in redemption amounts.
Current account balances were ¥461.1 trillion, down ¥7.0 trillion (70,222億円) month-on-month. The current account/total assets ratio fell to 67.4%, the lowest in the past 12 months. This 3.6 percentage-point decline from 71.0% at end-January 2025 indicates a meaningful shift in the liabilities-side liquidity structure.
Monthly data show the current account ratio peaked at 74.3% in April 2025 and has trended downward since, with an accelerated decline since September 2025. Notably, current account balances fell ¥21.6 trillion in September and ¥16.1 trillion in December, concentrating large withdrawals at quarter-ends.
A declining current account ratio implies financial institutions are withdrawing funds from BOJ current accounts. This may reflect changes in financial institutions' portfolio and funding behavior or the effects of the BOJ's interest-on-reserves policy.
Banknotes in circulation (発行銀行券) were ¥116.9 trillion, broadly flat over the past 12 months. Cash demand remains stable and shows no major change in the economy's cash transaction needs.
Looking at the BOJ Tankan business conditions DI, large-manufacturer manufacturing improved from 12 in 2025 Q1 to 15 in 2025 Q4. Large non-manufacturers remain around 34, medium-sized manufacturers improved from 11 to 16, and small manufacturers from 2 to 6.
The improvement in corporate sentiment under QT suggests that balance sheet reduction has not produced an excessive tightening effect on the real economy thus far. However, with the current account ratio declining, continued monitoring is required regarding potential impacts on bank lending behavior and market liquidity.
Three items merit attention going forward:
First, the change in JGS holdings at the March quarter-end. Historical patterns imply a large reduction on the order of ¥15 trillion at end-March; whether the decline exceeds past trends will be important for judging further acceleration of the annual QT pace.
Second, the persistence of the downward trend in the current account ratio. The 67.4% level is the lowest in the past 12 months; continued declines could imply a qualitative change in market liquidity conditions. Monthly market statistics and flow-of-funds data published during the month should be examined to confirm shifts in financial institutions' funding behavior.
Third, the trajectory of loans outstanding. Loans have been the main adjustment valve in the balance sheet contraction; changes in banks' funding demand could alter the pace and composition of balance sheet normalization.
The BOJ's passive QT is proceeding steadily at an annual pace of ¥41.8 trillion. As the structural shift of a rising JGS share and a falling current account ratio continues, it will be necessary to evaluate both stock and flow effects on financial markets and the real economy on an ongoing basis.
パッシブQT: A policy in which the Bank of Japan allows its balance sheet to shrink naturally by not reinvesting redemptions of JGS holdings. A form of Quantitative Tightening that does not involve active asset sales.
フロー効果: The impact of the central bank's monthly net purchases or reductions of JGS on market supply-demand dynamics and price formation. Under QT, the monthly pace of JGS decline can exert upward pressure on market interest rates.
ストック効果: The persistent effect that the cumulative stock of assets held by the central bank has on long-term interest rates and the term premium. Larger holdings tend to exert stronger downward pressure on long-term yields.
当座預金比率: The ratio of current account balances (当座預金) to total assets on the BOJ's balance sheet. It indicates the scale of reserves financial institutions hold at the BOJ and serves as a gauge of the liquidity environment in the financial system.
政策資産: The Bank of Japan's holdings acquired as part of its easing measures: the sum of ETF, J-REIT, and corporate bond holdings. These are non-JGS assets purchased under non-traditional asset programs.
営業毎旬報告: Statements of Account: the BOJ's high-frequency balance sheet releases published three times monthly (on the 10th, 20th, and month-end). They disclose major asset and liability balances in units of 100 million yen and serve as baseline data for assessing policy implementation.
12ヶ月累計: The sum of month-on-month changes in JGS holdings over the most recent 12 months. It is used to assess the annualized QT pace and smooth seasonal effects.
国債比率: The share of JGS holdings in total assets on the BOJ's balance sheet. It indicates the weight of JGS in the asset composition and is a key metric for evaluating the normalization process.
This column was automatically generated by AI integrating Bank of Japan balance sheet data (Statements of Account), Federal Reserve (FRED), and ECB statistics as a BOJ balance sheet analysis resource. This is not a recommendation to buy or sell any financial instruments. Please make investment decisions at your own responsibility and consult professionals as needed.