Japanese firms may opt to play squirrel with cash

SOME Japanese firms, facing the possibility of negative interest rates on their deposits, would consider stuffing their cash in a safe rather than pay to keep it in the bank, a poll has found.

This would be an unintended and unwelcome side effect to the country’s new monetary policy.

The bulk of companies in the Reuters Corporate Survey said they would keep their money in bank accounts if their lender followed the Bank of Japan in cutting rates below zero, but 15% said they would withdraw funds. “We would store cash in our company safe,” wrote a manager at a services company.

The central bank shocked investors in January by cutting a benchmark interest rate to below zero, seeking to end two decades of deflation and encourage loan and investment demand.

But the willingness of a chunk of corporate Japan to squirrel cash away rather than leave it on deposit high- lights the difficulty Prime Minister Shinzo Abe has in getting companies to do their part in supporting his policies.

The survey also showed that 62% of firms disapproved of the central bank’s new policy.

Banks insist they won’t pass on negative rates to their small-account holders, but some lenders have left open the possibility of raising fees on big deposits, meaning a net charge to customers. Big companies tend to park their cash in current accounts, which already yield zero interest.

The companies’ concerns mirror those of many of Japan’s savers, especially older people on fixed incomes.

When negative rates took effect in mid-February, queries about home safes surged, especially from customers aged 50 and over, said Noriyuki Inde, a supply specialist at electronics retailer Yodobashi Camera. Sales of safes were running 40% to 50% above this time last year, he said. —