BoJ be­gins neg­a­tive rate

The Pak Banker - - COMPANIES/BOSS -

The Bank of Ja­pan on Tues­day started charg­ing 0.1 per­cent on a por­tion of the ex­cess funds that fi­nan­cial in­sti­tu­tions have in ac­counts at the cen­tral bank.

The neg­a­tive in­ter­est rate would have ap­plied to 23.2 tril­lion yen ($203 bil­lion) if the pol­icy had been in place last month, the bank es­ti­mated. While the new mon­e­tary tool took ef­fect on Tues­day, fig­ures for its ap­pli­ca­tion won't be avail­able un­til the middle of March. The cen­tral bank had pre­vi­ously es­ti­mated that the rate of mi­nus 0.1 per­cent would be ap­plied on about 10 tril­lion yen of fi­nan­cial in­sti­tu­tions' re­serves held at the BoJ.

Gov­er­nor Haruhiko Kuroda un­veiled the pol­icy on Jan. 29 to spur banks to lend by pe­nal­iz­ing them for hold­ing some of their ex­cess re­serves at the cen­tral bank.

The im­me­di­ate im­pact re­mains un­clear be­cause Ja­pan has been buf­feted by ex­ter­nal forces in the two weeks since the an­nounce­ment, with the yen strength­en­ing and stocks drop­ping amid con­cerns over the slow­ing Chi­nese and global economies.

Sixty-one per­cent of re­spon­dents in a poll said the mi­nus rate pol­icy won't buoy the econ­omy while only 13 per­cent said it will, ac­cord­ing to the poll re­leased on Tues­day. The BoJ adopted a three-tier sys­tem to limit the amount of losses for banks.

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