Gross Says Central Bank Forgiving Debt Is Only Endgame for Japan

by John Gittelsohn

Billionaire bond investor Bill Gross said the only way for Japan to eventually cut its debt burden is for the central bank to acquire it and forgo repayment, a scenario that may play out in similar ways in other countries.

“I think that’s where they’re headed,” Gross, one of the best-known and longest-serving bond managers, said Wednesday in an interview with Bloomberg’s Erik Schatzker. “I’m not endorsing that. I think at some point, Japan will basically buy up all its debt and the central bank will forgive the treasury and try to move forward with that. I see no other way out for Japan.”

Japan has the world’s heaviest debt burden and an economy that has stagnated for two decades despite government stimulus efforts through low or negative interest rates.

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