Paying to lend thaws Japan money market as trusts charge savers

TOKYO (May 17): Tokyo’s money market is thawing as banks realize it’s better to pay interest to lend than face the cost of keeping money at the Bank of Japan.

The outstanding amount of overnight interbank loans has more than doubled from a record low and the average interest rate reached a record at minus 0.081%, near the BOJ’s negative benchmark. Because the central bank only charges fees for new reserves that aren’t mandatory, it has taken time for the nation’s lenders to adjust their policies. Trust banks started to charge savers to accept cash on April, analysts said.

“The market is starting to function again,” said Kenji Sato, a manager at the planning and research department of Central Tanshi Co, a Tokyo-based money-market dealer and broker. “The situation is far more welcoming than in February or March. For trading volume to expand further, it’d be good to see larger banks, which can take money in big lots, participate.”

---

Related Stories

• Briefs: Yen strengthens after Japan’s PM announces step down; Thai court ousts PM; Declining interest rates to drive UOB
• Japan’s three-day meltdown rewrites records; analysts debate Fed inter-meeting cuts
• The US economy won’t be immune to high rates forever

---