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Fixed Income Commentary

What are “switch auctions” that have sparked debate on JGB market?

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What are “switch auctions” that have sparked debate on JGB market?

Key points
  • June PD meeting discussed introducing “switch auctions” as way to address declining liquidity for super-long, off-the-run JGBs
  • Switch auctions used in Italy and other advanced economies; similar system implemented in Japan when issuance of inflation-indexed JGBs was resumed
  • Purchases of super-long, off-the-run JGBs need to consider consistency with liquidity enhancement auctions; focus on opinions at Sep 24 PD meeting
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