"At the moment, the effect of our monetary policy in stimulating economic growth is very limited"
- Masaaki Shirakawa, the Governor of the Bank of Japan
While everyone is concerned with heavily indebted eurozone countries, the debt loan of the world's third largest economy is constantly growing. Around a quarter of all country's budget goes to servicing it. During the last decades, Japanese sovereign debt surged to €11 trillion ($14.6 trillion), the figure, which corresponds around 230% of annual gross domestic product. At the same time, this is far higher than Greece's 165%. Compared to the Eurozone countries, Japan borrows from its own people, as 95% of all debt is owned by nation's banks and insurers, which used the savings deposits of the general population to make these purchases. Shinzo Abe claimed his readiness to launch a massive new €91 billion ($120 billion) economic stimulus programme in order to boost the economic growth. It is highly expected that Japanese sovereign debt will jump to 246% of annual GDP by the end of 2014.
"At the moment, the effect of our monetary policy in stimulating economic growth is very limited. The cheap money is stuck in the banks rather than flowing into the real economy. The money is there, liquidity is abundant, interest rates are very low - and, still, firms do not make use of accommodative financial conditions," said Masaaki Shirakawa, the Governor of the Bank of Japan. "The return on investment is too low."
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