Reuters running with a story from sources close to the BOJ
"The Bank of Japan's policy board is set to discuss this week whether to exempt $90 billion in short-term funds from its newly imposed negative interest rate, after the securities industry warned that investment money would be driven into bank deposits.
Some in the BOJ are sympathetic to the request, which came from the Investment Trusts Association, the sources said, because a flow from investment to bank accounts would go against a push by PM Abe and the central bank to move more of Japan's immense savings out of deposits and government bonds and into more productive investments, to kick-start growth and defeat stubborn deflation.
But other central bankers worry that granting an exemption from negative rates for "money reserve funds" (MRFs) - a low-risk product brokerages offer investors to temporarily park their cash - could create a troublesome precedent as the financial industry seeks to shield other investments from negative rates, the people say.
"MRFs play an important role in fund settlement," said one of the sources. Another said: "I think it's only natural (for the BOJ board) to debate it (at the policy meeting on Monday and Tuesday)."But another of the sources said: "This is a touchy issue ... It raises the question of whether (allowing an exemption) could lead to similar requests by banks."
A BOJ spokesman said he could not comment, citing a news blackout before the policy meeting.
Last week Eamonn reported that Kuroda & Co are scrutinizing the impact of negative rates on the money markets. The BOJ meet tomorrow and Tuesday with the announcement of the outcome between 03.00-04.00 GMT followed by the usual presser at 06.30 GMT
Hot topic given the rise of the yen and falls in equity markets since the BOJ cut rates on 29 Jan.
Reuters has more here
BOJ boss man Kuroda - How long before he doesn't see the funny side?
