BOJ faces beer drinker's dilemma on negative rates
Nikkei -- Nov 15
Japan's economic professors frequently draw on a common saying as a metaphor to teach students about diminishing returns: The first beer of the night is incredibly satisfying, the second one not as much.

Now this lesson is playing out in Japan's monetary policy, as the Bank of Japan weighs taking interest rates further into negative territory even as lenders approach their hard lower limit of 0%.

"We have a special contractual agreement to hold lending rates at zero even if the Tokyo interbank offered rate goes negative," said Concordia Financial Group President Kenichi Kawamura at an earnings conference on Monday. Concordia is the parent of The Bank of Yokohama.

Banks often lend to companies at a set premium above Tibor. This means that when the interbank rate falls, lending rates fall too.

The three-month Tibor stands at 0.6727%, "If we bring interest rates further into the negative, Tibor will enter negative territory as well," a central bank official said.

In reality, Japanese banks do not have the option of lending at negative rates. The Financial Law Board, an advisory body of lawyers sponsored by the BOJ, issued an opinion in February 2016 that banks should not lend money at negative rates. Since borrowers pay interest as a price for financing, negative rates just mean that they no longer have to pay this price, the board concluded.

BOJ Gov. Haruhiko Kuroda has hinted that more easing could be in the offing. The fact that the interest rate is at minus 0.1% "doesn't mean that no further reduction is possible," he said last month after the latest policy meeting.

Negative rates are intended to lower the hurdle for borrowing and spur economic activity. But once lending rates hit the floor at zero, there is limited benefit from pushing interest rates further into negative territory.

News source: Nikkei
Sep 19
The key inflation gauge went negative again last month, driven down by government discounts meant to boost consumer spending and help the pandemic-hit travel industry. (Japan Times)
Sep 19
The former chairman of Japan Life Co, a now-bankrupt company, was arrested Friday along with 13 others on suspicion of running a "rental owner" investment scam involving clothing, jewelry and other goods it claimed had health benefits, police said. (Japan Today)
Sep 18
Japanese Prime Minister Yoshihide Suga hit the ground running on day one, meeting with ministers in charge of top policy goals from cutting red tape and digitizing the government to combating the new coronavirus. (Nikkei)
Sep 18
Policymakers at the Bank of Japan have decided to keep their current monetary-easing policy unchanged. (NHK)
Sep 18
Developers have released the details of a major construction project that's underway in central Tokyo. (NHK)
Sep 17
Two of Japan's largest rail operators now expect to report their largest full-year net losses since their 1987 privatization, as the coronavirus pandemic brings a deep and potentially long-lasting slump in passenger traffic. (Nikkei)
Sep 16
Fraudulent e-money withdrawals in Japan have expanded to five other service operators in addition to NTT Docomo Inc, internal affairs minister Sanae Takaichi said Tuesday. (Japan Today)
Sep 16
A former aide to Carlos Ghosn has fronted a Japanese court over allegations of financial misconduct related to the under-reporting of pay promised to the ex-Nissan chief. (FRANCE 24 English)
Sep 16
Gambling and casinos in Japan have not been legal for all that long. When looking at the history of casinos, it is easy to say that the future should be brighter than the past. (newsonjapan.com)
Sep 11
Amazon.com Inc's Japan unit has pledged to return around 2 billion yen ($18.8 million) to around 1,400 suppliers after having them shoulder part of the costs to cover discounts the online retailer applied on goods, the antitrust watchdog said Thursday. (Japan Today)
Sep 10
Workers in Japan may be looking beyond the pandemic. A government survey says their view of business conditions has improved, for the fourth month in a row. One index fell and that was for restaurants. (NHK)
Sep 08
A key gauge of business conditions in Japan rose slightly in July, but the uptick was not enough to change the assessment of the economy as "worsening". (NHK)
Sep 07
Massive job cuts caused by the coronavirus pandemic are concentrated on sectors that tend to employ many women, a trend that highlights a lopsided economic impact both at home and abroad. (Nikkei)
Sep 05
A powerful typhoon threatening record-breaking wind and rain for Japan has put companies and transportation networks on high alert, with some moving to cut operations starting this weekend. (Nikkei)
Sep 05
Amazon.com Inc.’s Japan unit has submitted to the country’s antitrust watchdog a set of proposed reforms including returning money to its suppliers after having them shoulder part of the costs to cover discounts the online retailer applied on goods, sources close to the matter said Thursday. (Japan Times)
Sep 04
Japan is making a bid to become Asia's premier financial hub as some institutions exit Hong Kong over political and legal concerns. (NHK)
Sep 01
Warren Buffett's Berkshire Hathaway has bucked the trend of socially responsible investing by acquiring 5%-plus stakes in five Japanese trading houses deeply involved in fossil-fuel-linked businesses. (Nikkei)
Aug 28
A voluntary request to have food establishments in the capital’s central 23 wards operate under reduced business hours will be extended into next month, Tokyo Gov. Yuriko Koike announced Thursday. (Japan Times)
Aug 27
Reader, heal thyself! In many a bookstore in Japan these days, that appears to be the message from publishers to consumers looking for summertime page-turners or browsers in search of popular titles about golf, computers and business-and-finance trends. (Nikkei)
Aug 27
The ratio of women who hold senior positions at companies in Japan has inched up, but remains far below the government's target. (NHK)