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<p>In February 2016, the Bank of Japan (BOJ), in order to reach a 2% inflation target, initiated a negative interest rate policy by increasing massive money supply through the purchase of long-term Japanese government bonds (JGBs).</p>
Background
In February 2016, the Bank of Japan (BOJ), in order to reach a 2% inflation target, initiated a negative interest rate policy by increasing massive money supply through the purchase of long-term Japanese government bonds (JGBs).
This policy flattened the yield curve of JGBs. Banks started to purchase government bonds less frequently, because of the negative yield for both short-term government bonds and even for long-term government bonds up to 15 years.