The Japanese public are definitely not willing to lend to the government at such low interest rates. The majority holder of Japanese bonds is the Bank of Japan, who needs to purchase large amounts of bonds to conduct its monetary policy.

But that capital that the bank is providing the government with is from the Japanese public, yes, who are lending it to the bank for a low return?

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https://www.ft.com/content/23b560a4-f0f1-44a9-94af-88d4807211f4

Even after 30 lean, post-bubble years, Japanese households hold ¥2.1 quadrillion ($14.7tn) of financial assets, of which more than half ($7.7tn) is held in cash and deposits.

By contrast, households in the US and UK respectively hold 13 and 31 per cent in deposits.

In national terms, Japan’s cash savings alone are equivalent to the combined annual gross domestic product of Germany and India. In corporate terms, Mrs Watanabe could buy Apple, Microsoft and Saudi Aramco with what she has sitting (earning almost zero interest) in the bank.

When prices in Japan were stagnant or falling, as they were for most of the past 25 years, Mrs Watanabe’s preference for holding the majority of savings in cash was reasonable, especially so after the government guaranteed bank deposits in 1995.

The central bank’s long experiment with ultra-low interest rates, which began in the late 1990s, meant she was not making any returns, but nor was her wealth being significantly eroded as long as Japanese companies held back from raising prices.