During lower house budget committee deliberations, Kuroda explained that the book value of the central bank’s JGB holdings at the end of December stood at ¥564.1 trillion, while their market value was ¥555.3 trillion.

This means the unrealised losses on the central bank’s JGB holdings have increased about tenfold since the April-September period, when the losses stood at ¥874.9 billion.

The main cause behind the wider losses was BoJ’s decision in December to raise the 10-year yield cap to 0.5% from 0.25%, which caused interest rates to rise, especially on 10-year JGBs. As a result, the market value of the JGBs decreased significantly.

The BoJ has adopted a policy of holding JGBs to maturity, so “even if valuation losses occur or grow, they do not affect the periodic profit or loss,” Kuroda said.

There are concerns among experts that if unrealised losses increase and the market begins to feel uneasy about the BoJ’s financial condition, interest rates and exchange rates could be affected.