The Bank of Japan's failure to spur demand for its cheap loans is forcing it to buy more treasury bills rather than make more productive asset purchases.
The BOJ has raised holdings of bills maturing in one year or less by ¥7.21 trillion this year as of Feb. 28, exceeding the ¥6.09 trillion increase for the eight months through Dec. 31 after the central bank radically expanded stimulus in April.
In contrast, the outstanding balance of its loan programs fell 10 percent between April and February. Three-month bill rates have almost halved in the past six months to 0.04 percent, while those in the United States have risen three basis points.