Before large-scale issuance of government bonds began in Japan, the Bank of Japan in fact made active use of corporate-sector debt, especially bills, in providing funds. The important issue in the portfolio selection of a central bank is not the choice between government and private-sector debt, but rather the avoidance of distortions in resource allocation in the respective financial markets.
Based on this principle, the Bank intends to make greater use of selected, sound private-sector debt as market operations instruments or as collateral when it deems this necessary to achieve current policy objectives, such as the development of new markets. B.