Report

BOJ Tried a Bazooka with Negative Rates, but It's Just a Pop Gun

posted by Richard Katz on January 29, 2016

Found in Japan, categorized in Macro

Tags: Richard Katz TOE BOJ

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Headline

These corporations have so much cash on hand (or in the bank or other financial assets) that, even when the do increase investment somewhat, they have no need to borrow more from the banks.

Abstract

Followings are the key points fro this report,

- BOJ tried another surprise “bazooka” but only managed a pop gun
Will apply a “negative interest rate” of 0.1% on new deposits of “excess reserves” held by banks at the BOJ
Hope is that it will get banks to lend more and thereby boost company investment and consumer spending
It won’t work: problem is not banks unwillingness to lend, but business/firm unwillingness to borrow 

About Richard Katz

Richard Katz is Senior Fellow at the Carnegie Council for Ethics In International Affairs, the New York correspondent for Weekly Toyo Keizai, a leading Japanese business magazine, and formerly the editor of The Oriental Economist Report, a monthly newsletter on Japan.

Mr. Katz has taught about Japan’s economy as an Adjunct Associate Professor at the New York University Stern School of Business, and as a Visiting Lecturer in Economics at the State University of New York (SUNY) at Stony Brook.

Mr. Katz is the author of two books on Japan's economic travails and has just finished a third book on reviving entrepreeurship in Japan.

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