QUESTION: “In case Japan becomes insolvent, what will happen to government bonds?”
日本が財政破綻した場合、国債はどうなりますか : 財務省
http://www.mof.go.jp/faq/jgbs/04be.htm
Answer . . .
http://www.mof.go.jp/faq/jgbs/04be.htm
“Rest assured!” How bondholders can possibly rest assured under these circumstances remains a mystery, in particular since the MoF then proceeds to tell them exactly how they will get kicked in the groin: bonds will be redeemed “responsibly.”
Not when they mature, but responsibly.
Thus, we have the MoF’s official action plan for the moment when the big S hits the fan, the moment when Japan with its declining wages and shrinking working-age population can no longer save enough to mop up all the government bonds necessary to keep the government afloat.
A selective default. Bonds will retain their “value,” but the government won’t redeem them when they mature. It will redeem them in bits and pieces, stretched into all eternity, as it sees fit. You’ll die before you’ll see your money.