Japan Banks Cut Bonds, Keep Cash on Negative Rates
- Banks’ JGB holdings drop 5.5% in April, as reserves rise 3.4%
- Weak demand means ‘no one to lend to,’ says NLI Research
The Japanese national flag flies outside the Bank of Japan headquarters in Tokyo, Japan, on Friday, Dec. 19, 2014. The Bank of Japan maintained unprecedented stimulus, as Governor Haruhiko Kuroda's bid to stoke inflation faces increasing challenges from the tumble in oil prices.
Photographer: Kiyoshi Ota/BloombergNegative interest-rate stimulus is half working in Japan, as lenders cut government bond holdings by the most in almost three years, only to hoard proceeds at the central bank.
Japanese government bonds owned by banks fell 5.5 percent in April from a month earlier, the fastest pace since June 2013, as most yields slumped below zero, Bank of Japan data show. Their deposits at the BOJ, where only a small part of reserves are charged fees, rose 3.4 percent in the period. That doesn’t bode well for loan growth now riding near a three-year low.