In particular, since JGB prices affect the price formation of many financial products and assets, risks already may have accumulated in such a way that drastic fluctuations in JGB prices could lead to revisions to prices of a wide range of financial products and assets, thereby exerting severe effects on the financial system and economic activity.
In addition, attention should be given to (1) the possibility of a higher risk that the Bank’s large-scale JGB purchases will be perceived as central bank financing of fiscal deficits and (2) a risk that the mechanism of maintaining fiscal discipline through interest rates will be impaired, reflecting overly heightened expectations that the stability in the JGB market will be ensured.