• Kyodo

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Assets held by households in Japan hit a record ¥1,901 trillion ($18 trillion) at the end of September, up 2.7% from a year earlier, as the COVID-19 pandemic weakened consumption and left people with more cash and deposits, the Bank of Japan said Monday.

The expansion followed a cash handout program in which the government gave ¥100,000 to each person to help cushion the economic impact from the pandemic. The result suggests that rather than splash out, consumers instead added to savings.

The total of assets held in cash and deposits increased at the fastest pace of 4.9% to ¥1,034 trillion, also the largest on record and which accounts for 54.4% of overall assets held by Japanese households.

After an initial wave of COVID-19 infections led to a state of emergency and the economy contracted in the April to June period, economic activity gradually resumed in the following quarter.

But activity has yet to return to pre-pandemic levels and a resurgence of the virus has caused uncertainty over the outlook.

BOJ data also showed that assets held in equities dropped 1.8% to ¥181 trillion while debt securities rose 2.2% to ¥26 trillion.

Companies, excluding financial institutions, also favored holding assets in cash and deposits amid the pandemic-caused uncertainty. Their holdings rose 14.3% to a record ¥309 trillion, accounting for about a quarter of total corporate assets worth ¥1,215 trillion, up 6.1% from a year before.

The total value of loans extended by financial institutions increased 5.6% to ¥937 trillion.

Loans to nonfinancial firms grew 9.7% to ¥354 trillion. The government and the BOJ have introduced incentives for banks and other institutions to increase lending to firms hit by the pandemic.

The quarterly report said the BOJ’s holdings of Japanese government bonds hit a record ¥542 trillion, which means the central bank owned 45.1% of the outstanding debt issued by the state.

Under its massive asset purchase program to support the economy, the BOJ removed a cap on its government bond buying earlier this year.

Overseas investors owned 12.6% of Japanese government bonds after they increased their holdings by 4.4% to ¥152 trillion, according to the data.

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