Suppose the bank of Japan buys bond. what will happen to balance sheet Suppose t

Question

Suppose the bank of Japan buys bond. what will happen to balance sheet
Suppose the citizens pay tax for Japan, what will happen to balance sheet

About the Monetary Financial Payments Bank Policy System Markets |Assets Gold Cash Japanese government securities Commercial paper Corporate bonds Pecuniary trusts (stocks held as trust property Pecuniary trusts (index-linked exchange-traded funds held as trust property) Pecuniary trusts (Japan real estate investment trusts held as trust property Loans (excluding those to the Deposit Insurance Corporation) Foreign currency assets Deposits with agents Oth

Explanation / Answer

when there is a fiscal deficit then government issues bonds to bank of japan and raises money from it and spend on economy. it repays through the taxes it collected.

buying a bond is a non current asset where bank of japan gets some interest over the bond.

bond will be bought from cash. so cash balance gets reduced and a non current assets gets added inline.

on receipt of the interest P/L gets credited so that reserves and surplus balance gets increased in equities and liabilities side and cash balance gets increased due to interest.

PART 2 :-

if citizens pay tax government buy back its bonds buy repaying in cash. so cash balance gets increased and the bonds which is shown as non current asset will be removed from statements.

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