{"id":19541,"date":"2016-04-05T11:27:28","date_gmt":"2016-04-05T16:27:28","guid":{"rendered":"http:\/\/olduvai.ca\/?p=19541"},"modified":"2016-04-05T11:27:28","modified_gmt":"2016-04-05T16:27:28","slug":"mises-org-and-so-it-begins-negative-interest-rates-trickle-down-in-japan","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=19541","title":{"rendered":"Mises.org: And So It Begins…Negative Interest Rates Trickle Down in Japan"},"content":{"rendered":"
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MISES.ORG: AND SO IT BEGINS\u2026 NEGATIVE INTEREST RATES TRICKLE DOWN IN JAPAN<\/a><\/h3>\n<\/div>\n<\/header>\n
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The negative interest rates imposed by the Bank of Japan have begun to make their way into the Japanese banking system. Japanese trust banks have\u00a0begun to impose negative interest rates<\/a>on accounts held by institutional investors. It shouldn\u2019t be surprising that Japanese banks are trying to pass on the costs imposed by the central bank\u2019s policy of negative interest rates. It\u00a0happened in Switzerland<\/a>, it is happening in Japan, and it will happen in Europe. And as it becomes more widespread, investors will begun to withdraw their funds from the banking system.<\/p>\n

Some people,\u00a0such as Ben Bernanke<\/a>, don\u2019t think that will have much of an effect on the banking system.<\/p>\n

It seems implausible, though, that modestly negative short-term rates would have large incremental effects on bank profitability or lending. Contrary to the simple story, most U.S. bank funding does not come from small depositors, but from wholesale funding markets, large institutional depositors, and foreign depositors, all of whom would presumably accept a marginally negative rate if the alternative were holding currency.<\/p><\/blockquote>\n

It\u2019s actually the depositors at either end of the Bell curve who would be most likely to withdraw their funds. The depositor with $500 in the bank who is facing guaranteed losses might just pull out five $100 bills and stuff them under his mattress. Similarly, a large institutional depositor with $500 million or more in funds facing a negative interest rate of -0.10% (a cost of $500,000+ per year) might find it more worthwhile to build a safe room and hire armed guards, particularly if he thinks negative interest rates will be around for a long time. It is the depositors with in-between sums, too much to stuff under the mattress but too little to assume full responsibility for guarding their money, who will be affected the most.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

MISES.ORG: AND SO IT BEGINS\u2026 NEGATIVE INTEREST RATES TRICKLE DOWN IN JAPAN The negative interest rates imposed by the Bank of Japan have begun to make their way into the Japanese banking system. Japanese trust banks have\u00a0begun to impose negative interest rateson accounts held by institutional investors. It shouldn\u2019t be surprising that Japanese banks are […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[53,57,68,124,281,8949,558,1389,775],"class_list":["post-19541","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-deposits","tag-bank-of-japan","tag-ben-bernanke","tag-central-banks","tag-europe","tag-mises-org","tag-negative-interest-rates","tag-nirp","tag-switzerland"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19541","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=19541"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19541\/revisions"}],"predecessor-version":[{"id":19542,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19541\/revisions\/19542"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=19541"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=19541"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=19541"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}