That should cement Japan Post’s position as the buyer of first and last resort for the Ministry of Finance. The banking arm is already the biggest holder of government bonds, which accounted for about four-fifths of its $2,100bn in assets at the end of last year. It does no lending at all; if deposits increase – and they almost certainly will, given a network of branches about twice the size of Mitsubishi UFJ, the number two – the more bonds MoF can push its way.
Public finances are, of course, utterly wretched: the 2010 fiscal year, beginning on Thursday, marks the first time since 1946 that tax receipts ($400bn) will drop below budgeted bond issuance ($474bn). In December MoF made a pledge to “ensure necessary resources without being so quick to rely on unbridled issuing” of government bonds. The lifting of the deposit cap, however, confirms it is hell-bent on commandeering private savings. Little wonder the listed banking sector, contemplating a future starved of opportunity, slid en masse on Wednesday.