Japan negative interest rates

Electrum

Total, utter insanity. Yet, that’s what it now takes to keep the 2008 redux at bay for just a few business quarters longer.

Now, other countries have done this, including Denmark, Switzerland, and Sweden. Heck, even Germany has had negative bond prices, but Japan is the 3rd largest economy on earth, and is the largest yet to actually go full NIRP. If Japan’s bankers have concluded that negative interest rates are their only option left….we’re much closer than we think to all of this coming unglued!

Electrum

BoJ Adopts Negative Interest Rates, Fails To Increase QE


Japan became the newest country to adopt negative interest rates, where basically, depositors, who have loaned money to banking institutions, will now pay a fee to those banks for the privilege of being the lender in the equation!

Will that not just make everybody take all their funds out of banks and hold in cash?

Why would you ever put your cash into a bank where it will slowly be taken away from you into the banks coffers? Better to hold in cash, bank runs anyone?

Ballard

The Japanese interest rates have been incredibly low for some time so to Joe Public I don't suppose that it'll make a massive difference, other than psychologically.

As to withdrawing cash, yes, that's a possibility but I wouldn't be hugely comfortable having my life savings under the mattress. That's just a personal view and I'm sure that some would.

Your point about the banks coffers being increased is a little off as the cash that the banks hold will also be subject to negative interest.

A bank that I worked for until recently had a new system installed and I commented that part of the testing should be for negative interest rates. This was a year or two before this crisis and I was laughed for suggesting it. People actually laughed. It was good to have the final laugh even if I did have to wait 18 months.

purch

Electrum wrote: »

BoJ Adopts Negative Interest Rates, Fails To Increase QE

Have you only just noticed.

This is last weeks news.

Do try to keep up, you don't want to miss the cheap baked beans.

antrobus

Electrum wrote: »

Total, utter insanity. Yet, that’s what it now takes to keep the 2008 redux at bay for just a few business quarters longer.

Now, other countries have done this, including Denmark, Switzerland, and Sweden. Heck, even Germany has had negative bond prices, but Japan is the 3rd largest economy on earth, and is the largest yet to actually go full NIRP. If Japan’s bankers have concluded that negative interest rates are their only option left….we’re much closer than we think to all of this coming unglued!

What do you mean "Now, other countries have done this"? Switzerland has had negative rates since 2014. Have you only just noticed?

If you are trying to avoid the coming financial apocalyse you really need to pay attention, otherwise you are just going to miss the signs.

cells

isnt it neg rates if you lend to the central bank, eg to stop banks lending their excess to the central bank but to lend it via interbank lending to each other

basically it should in normal times have little impact at all as most banks would rather lend to other banks than mother bank which offers the lowest possible rate

antrobus

Ballard wrote: »

The Japanese interest rates have been incredibly low for some time so to Joe Public I don't suppose that it'll make a massive difference, other than psychologically.....

Ever since the bubble burst in the 1990s Japanese interest rates have been zero for most purposes. Thus the Japanese public have become accustomed to keeping their savings at home; the phrase is 'tansu yokin', which I think means 'wardrobe savings'. Don't knock it, at least it's a change from the mattress.

I know this because when the tsunami hit a few years ago, the Japanese police had the devil of a job trying to identify the owners of all these cash stuffed safes that washed up onshore.

Ballard

cells wrote: »

isnt it neg rates if you lend to the central bank, eg to stop banks lending their excess to the central bank but to lend it via interbank lending to each other

basically it should in normal times have little impact at all as most banks would rather lend to other banks than mother bank which offers the lowest possible rate

Interbank rates (up to 3 months) have been negative in the EUR for some time and long balances in nostros have accrued negative credit interest.

carslet

Was on the news today about it being possible it could happen here, all the talk of the soon IR rise

Generali

carslet wrote: »

Was on the news today about it being possible it could happen here, all the talk of the soon IR rise

Japan faces a unique set of challenges not least of which is a falling population.

The fall in the oil price will feed through the economy soon enough. Then we'll see where CPI ends up.

vlad

Would NIR here perhaps be the starting pistol for the biggest ever growth in consumer spending? After all if its costing you money to keep it in the bank, and stuffing it under the mattress is dodgy why not just go out and spend most of it?