There is an article via Drudge saying that Japan has hit a critical point on state debt. Japan's debt-to-GDP ratio is around 200%. This is higher than the U.S., Ireland, and even Greece. It is amazing that interest rates have stayed so low for so long in Japan.
The Japanese central bank has not created money out of thin air to the same extent that the Fed has. This has kept inflation relatively low there. Still, with a debt so high, there have to be a significant number of buyers in the bond market. Since foreign governments are not buying Japanese debt the way they buy U.S. government debt, I assume that the biggest bond buyers are Japanese citizens. It has been a decent investment so far, just as real estate was a good investment in the U.S. up until 2006.
This kind of debt cannot be sustained forever. Something will eventually have to give. Either the Japanese government will cut spending or interest rates will rise and the debt will become unmanageable. Then we will see the Japanese central bank in action or we will see a government default. This is why I don't see the yen taking over as the world's reserve currency.
If this whole story proves one thing, it is that we shouldn't underestimate how long an insolvent government can kick the can down the road. With a central bank and gullible investors, the day of reckoning can be delayed for longer than we might think.