The big picture
The Bank of Japan's August balance sheet shows the monetary base contracting for the first time in months, driven by a sharp reduction in reserve balances and a swing in government deposits to a larger negative position. Outright JGB purchases fell to ¥2.32trn, while redemptions rose to −¥1.78trn, a combination that tightens money market conditions and could push short-term rates upward. Meanwhile, the central bank's collateral framework in Russia remains stable, with the haircut coefficient for a specific federal bond near one, allowing banks to borrow nearly the full market value of the bond. These two developments, though in different markets, both hinge on the mechanics of central bank liquidity provision and its transmission to bond pricing.
On the watchlist
- On 2026-09-08, watch the BoJ's next JGB purchase operation for any further reduction in the monthly amount below ¥2.32trn.
- Watch the BoJ's current account balances for the September release to see if reserve balances continue to fall below ¥390.54trn.
- Watch the Bank of Russia's next collateral list update for any change in the haircut coefficient for bond RU000A10DQB6 from its current level near one.
- Watch the Japanese Ministry of Finance's September reserve assets release to see if official reserve assets decline further from $1.21trn.