If this is the case, then the Bank holds firm against complying with such a request. 5  BIS Review 80/1999  Once a central bank engages in the automatic financing of a fiscal deficit, sooner or later the time will come when it cannot put a brake on money expansion, thereby inducing vicious inflation.
This is one valuable lesson that we have learned from history and constitutes the main reason why the underwriting of long-term government bonds is prohibited not only in Japan but also in other industrialized countries. An increase in the outright purchase of long-term government bonds eventually leads to the same situation as in underwriting.