Financial assets held by Japanese households climbed to a record JPY2.519 quadrillion ($16 trillion) at the end of June, up 11.0% from a year earlier on the back of rising share prices, the Bank of Japan said, Kyodo News reported on September 20.

The figures point to a continued shift in savings habits in a country long associated with cash hoarding, as tax incentives and higher interest rates draw households into equities, funds and government debt while the central bank unwinds a decade of ultra-loose policy.

Household equity holdings jumped 47.0% to JPY486 trillion, while investment trusts surged 36.8% to JPY193 trillion. Investment flows have stayed strong as more households use NISA, the tax exemption programme for private investors.

Holdings of debt securities rose 15.5% to JPY38 trillion, with higher interest rates prompting greater purchases of Japanese government bonds issued for individual investors.

The Bank of Japan lifted its key policy rate from 0.75% to a 31-year high of 1.25% at its two-day meeting that ended on Friday, continuing to normalise monetary policy in the face of persistent inflation.

Household liabilities also reached a record, rising 4.1% to JPY416 trillion on the back of increased housing loans and credit card use.

Cash and deposits edged up just 0.5% to JPY1,132 trillion, and their share of total household assets fell.

Preliminary data for the April to June quarter showed the central bank held 46.7% of outstanding government bonds at the end of June, with the balance standing at JPY470 trillion. That share has been falling as the Bank of Japan scales back its bond purchases in stages.