ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Economy

BOJ exempts short-term funds from negative interest

TOKYO -- The Bank of Japan decided Tuesday that it will not apply negative interest rates to money reserve funds, a vehicle brokerages use to park investors' cash, in order to protect retail investors and avoid chaos in the market.

     The balance of MRFs come to about 10 trillion yen ($88.4 billion). Had the amount been subject to the negative rate, it would have cost brokerages over 10 billion yen a year to make up the shortfall.

     BOJ Gov. Haruhiko Kuroda explained that ensuring stability in MRFs will encourage changes in asset management behavior such as individuals putting money into stocks.

     "We will help the BOJ achieve its policy goals," said Makoto Shirakawa, head of the Investment Trusts Association, Japan.

     The BOJ also decided to keep about 10 trillion yen to 30 trillion yen of its total current account balance subject to the negative rate. It will reassess the category every three months to avoid expanding the targeted amount, even if the bank's total balance increases over time. 

     The bank will reward financial institutions that boosted lending using the BOJ's assistance program by exempting up to four times the amount of the new loans from negative interest rates. It hopes to relieve some of the burden on banks that are expanding financing efforts.

     Financial institutions' criticism of the BOJ's negative rate policy "has been harsher than expected," said a BOJ source. The bank may be paving the way toward further cuts by adjusting the current framework.

(Nikkei)

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends January 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media