According to the Statements of Account for end-July 2026 released today, the Bank of Japan's total assets stood at ¥644 trillion 295.7 billion, an increase of ¥4 trillion 744.8 billion from the previous month. JGS holdings stood at ¥519 trillion 381.8 billion, marking an increase of +¥10,395 billion month on month. This was a rebound from the sharp ¥14 trillion 793.2 billion decline recorded at end-June, making it necessary to assess the figure in light of the quarter-end pattern of volatility.
[速報] QT Flow Analysis: Returning to a Monthly Pace of +¥1 Trillion
JGS holdings rose by +¥10,395 billion month on month in July 2026. Looking at monthly movements over the past 12 months, the BOJ's JGS holdings have settled into a pattern of alternating "sharp-decline months" and "small-increase months." Large declines occurred at quarter ends, including September 2025 (-¥148,911 billion), December (-¥153,987 billion), March 2026 (-¥158,104 billion), and June (-¥147,932 billion), while holdings generally increased by around ¥1 trillion in the intervening months.
July's increase of +¥10,395 billion was broadly in line with the most recent periods of increase—January 2026 (+¥11,876 billion), April (+¥10,793 billion), and May (+¥11,867 billion). This suggests that the sharp quarter-end declines may reflect technical factors such as concentrated maturities, and that the underlying pace during the month remains a gradual increase of just over ¥1 trillion per month.
Total assets also increased by +¥47,448 billion month on month, broadly tracking the rise in JGS holdings. Current account balances declined by -¥23,523 billion from the previous month, confirming that a contractionary trend continued on both the asset and liability sides.
[速報] Stock Analysis: JGS Ratio at 80.6%, Policy-Asset Weight Remains Elevated
The JGS ratio to total assets stood at 80.6% at end-July 2026, down slightly from 81.0% at end-June. This was, however, a technical movement reflecting a rebound after June's sharp decline, and the ratio remained elevated within the past 12-month range of 78.9%–81.0%.
The policy-asset ratio (the combined total of ETFs, J-REITs, and corporate bonds divided by total assets) was 6.1%, unchanged from end-June. ETF holdings stood at ¥37 trillion 9.8 billion, down ¥30.5 billion from the previous month. ETF holdings have declined modestly every month since June 2025, indicating a gradual but consistent pace of disposal. The corporate-bond ratio fell to 0.2%, its lowest level in the past 12 months.
| Month | JGS ratio (%) | ETF ratio (%) | Policy-asset ratio (%) |
|---|---|---|---|
| 2026-04 | 80.2 | 5.6 | 6.0 |
| 2026-05 | 80.2 | 5.6 | 6.0 |
| 2026-06 | 81.0 | 5.8 | 6.1 |
| 2026-07 | 80.6 | 5.7 | 6.1 |
The table shows that, while the JGS ratio has remained elevated, the reduction of policy assets such as ETFs and corporate bonds has proceeded only at a slow pace. The main drivers of balance sheet contraction are JGS holdings and loans outstanding, while adjustments to policy-asset holdings have been relatively lower on the priority list.
[Context] Progress of Passive QT on a 12-Month Cumulative Basis
The 12-month moving cumulative change in JGS holdings stood at -¥51.2 trillion as of July 2026. The decline widened further from -¥49.2 trillion in June, indicating that the annual trend of shrinking JGS holdings remains intact. The 12-month cumulative figure moved from -¥47.6 trillion in May to -¥49.2 trillion in June and -¥51.2 trillion in July, showing a gradual widening of the decline over the past three months.
| Month | 12-month cumulative (¥ trillion) |
|---|---|
| 2026-05 | −47.6 |
| 2026-06 | −49.2 |
| 2026-07 | −51.2 |
This table shows that, as sharp quarter-end declines accumulate, the annual pace of JGS reduction is gradually accelerating. Rather than focusing excessively on monthly fluctuations, this 12-month cumulative figure can be regarded as the indicator that best captures the underlying pace of passive QT.
In terms of the liquidity environment, the ratio of current account balances to total assets stood at 68.0% at end-July 2026. This was approximately 6 percentage points below the 73.7% recorded in June 2025, reflecting a gradual downtrend over the past 12 months. The ratio fell to 67.4% in February 2026 before temporarily rebounding in March and April, but it has appeared to bottom out around 68% since May. Banknotes in circulation stood at ¥114 trillion 980.7 billion, providing, together with the other indicators, a basis for assessing structural changes on the liability side.
[Context] Corporate Sentiment and the QT Environment
The Tankan business conditions DI shows that sentiment remained on an improving trend in the June 2026 survey, with the DI for large manufacturers at 22 and that for large nonmanufacturers at 37. Sentiment among small and medium-sized manufacturers also improved steadily, albeit gradually, from 1 in the September 2025 survey to 9 in the June 2026 survey.
The outlook DI was generally below recent levels, with the outlook for large manufacturers at 14 and that for nonmanufacturers at 29. This gap between current and expected conditions indicates that companies are factoring in the possibility that currently favorable business conditions may undergo some adjustment going forward. Even as passive QT progresses, the broadly improving trend in the Tankan business conditions DI suggests that no sharp negative correlation has emerged between balance sheet contraction and corporate sentiment.
Outlook
The key issue going forward is whether the month-on-month increase in JGS holdings will continue at the same pace as in July from August onward, or whether holdings will again turn to a sharp decline ahead of the next quarter end. In light of the pattern over the past 12 months, the next important observation point will be whether another substantial decline occurs in the Statements of Account for end-September.
Although the ratio of current account balances to total assets appears to have bottomed out near 68%, it will be necessary to accumulate data over the next several months to determine whether this level will become established as the lower bound of a new range or whether further declines remain possible. The pace of reductions in policy assets such as ETFs and corporate bonds also warrants close attention, particularly whether the current gradual disposal rate of around ¥30 billion per month will accelerate. When the next Statements of Account are released, these indicators will be reassessed to determine how they are evolving as underlying trends after excluding the quarter-end effect.
Glossary
| Term | Definition |
|---|---|
| Statements of Account | 速報 balance sheet data published by the Bank of Japan every 10 days. It presents the outstanding balances of major asset and liability items and serves as a primary source for monitoring the implementation of monetary policy during the month. |
| Passive QT | A form of quantitative tightening in which a central bank allows its holdings to decline naturally through the maturity and redemption of JGS holdings, rather than conducting active sales. The BOJ reduces its holdings by limiting new purchases while allowing securities to mature. |
| Stock Effect | The effect whereby the accumulated level of assets held by a central bank continuously suppresses long-term interest rates and term premiums. Unlike the flow effect, which concerns monthly transaction volumes, this effect reflects the influence of the outstanding stock itself on interest-rate formation. |
| Flow Effect | The short-term effect that the BOJ's monthly purchases or reductions of JGS and other assets have on market supply-demand conditions and price formation. The concept is used to assess the market impact of changes in the pace of QT. |
| Policy Assets | The combined total of ETFs, J-REITs, and corporate bonds purchased by the BOJ as part of its monetary policy. Unlike JGS, these assets carry equity, real estate, and credit risks. |
| Current Account Balances-to-Total-Assets Ratio | The ratio obtained by dividing the BOJ's current account balances by total assets. It indicates the scale of liquidity provision on the liability side; a decline means that funding supplied to the market has contracted relative to total assets. |
| Business Conditions DI | An index of corporate sentiment in the BOJ's Tankan survey. It is calculated by subtracting the percentage of companies responding "悪い" (unfavorable) from the percentage responding "良い" (favorable); a positive figure indicates favorable business sentiment. |
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.