Could Japan trigger the next global financial crisis?

FOR decades, Japan’s exceptionally low interest rates helped finance the world. Its banks, insurers and pension funds invested heavily abroad, particularly in US government bonds. Now, as Japanese yields rise, those capital flows may be changing.

The evidence is striking.

In the five months to August 2026, major Japanese banks and insurers purchased a net 5.4 trillion yen (US$34.2 billion) of Japanese government bonds with a maturity of two years or more, and banks sold 2.5 trillion yen of foreign bonds in September, a Financial Times report indicated.