Japan Set to Launch ¥17 Trillion Stimulus as Global Liquidity Shifts. Source: Wikimedia Commons

Japan is preparing a major economic stimulus package expected to exceed ¥17 trillion, according to Finance Minister Satsuki Katayama. The confirmation followed her meeting with Prime Minister Sanae Takaichi, who has been pushing for a stronger response to rising living costs and economic pressures. The figure surpasses earlier expectations that spending would be capped at around $110 billion, signaling a more aggressive approach to stabilizing Japan’s economy.

Katayama noted that the package will feature direct fiscal measures, including cash support, targeted incentives, and tax relief. The final proposal is set for cabinet approval on November 21. The plan reflects Takaichi’s strategy of supporting households while investing in critical sectors such as artificial intelligence and advanced technology—areas she considers vital for long-term competitiveness.

Fiscal announcements of this scale have historically influenced Japanese markets. Large spending programs often weaken the yen due to higher liquidity expectations, while encouraging capital outflows as investors search for better returns abroad. In environments like this, risk assets—especially Bitcoin—tend to respond early to shifting liquidity conditions.

The global backdrop is also becoming more accommodative. The United States has avoided a government shutdown, and the Treasury General Account remains near $960 billion, leaving room for significant outflows. JP Morgan expects around $300 billion in TGA reductions over the next month. Meanwhile, China continues injecting liquidity above ¥1 trillion weekly. These moves suggest a broad reversal from the tightening cycle that began in late 2021.

Despite improving liquidity, analysts warn that bullish conditions don’t guarantee immediate crypto market rallies. Some suggest Bitcoin’s recent decline could be a bear trap, forming when liquidity improves before sentiment catches up.

Japan faces deeper structural issues alongside economic and market pressures. Labor shortages are costing businesses roughly ¥16 trillion annually—four times the loss from five years ago and equal to 2.6% of GDP. The upcoming stimulus aims to counter rising prices, reinforce strategic industries, and mitigate long-term challenges, with final terms locked in once the cabinet approves the plan.