Data shows that Japan’s monetary base (i.e., cash in circulation) declined in 2025 for the first time in 18 years, reflecting the central bank’s gradual withdrawal from large-scale policy support. As the process of policy normalization continues, this trend is expected to persist.Data shows that the average balance of Japan’s monetary base in 2025 fell by 4.9% year-on-year, marking the first decline since 2007. In 2007, the Bank of Japan (BOJ) was just beginning its previous cycle of interest rate hikes.The average balance of Japan’s monetary base in December 2025 stood at 594.19 trillion yen (approximately $3.79 trillion), a year-on-year decline of 9.8%, and the first time it has fallen below the 600 trillion yen threshold since September 2020.Analysts expect Japan’s monetary base to continue its downward trend as the Bank of Japan (BOJ) continues to reduce its bond purchases and raise interest rates.