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BOJ to consider reviewing scheme to aid regional banks -Nikkei -Breaking

by Mike Robinson

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© Reuters. FILEPHOTO: Man stands before the Bank of Japan headquarters in Tokyo, Japan on May 22, 2020. REUTERS/Kim Kyung-Hoon//File Photo

TOKYO, Reuters – The Bank of Japan is considering a plan to revitalize regional banks. This was reported by the newspaper without citing sources. It did this to prevent excessive bank payouts.

Under the BOJ’s scheme to revitalise regional financial institutions, regional banks — if certain conditions are met such as merging and streamlining costs — will receive 0.1% interest on their current accounts at the central bank.

This has led regional banks to tap the funds in the call money market aggressively to transfer into BOJ accounts.

They have driven up Japan’s overnight call rate (Japan’s key money rate) to close to 0% despite the central banks’ pledge to hold short-term rates to around -0.1%.

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