BOJ keeps benchmark ratio for macro add-on balance unchanged

Author: Justin Low | Category: News

BOJ reviewing the benchmark ratio for current account balances kept with the central bank

  • Benchmark ratio kept at 21.5% (after being increased in September from 20.0%)
  • The negative rate interest rate will be applied to about JPY 10 trillion of funds (a change from the previous JPY 10-20 trillion over the last year)
This only applies to current account balances of financial institutions that are with the BOJ. Announcement can be found here.

Basically, the BOJ implements 3 tiers in storing the account balances. Tier 1 is basic balance - which is derived from previous years' funds with the BOJ - which gives +0.10% interest (to ease pressure on bank earnings). Tier 2 is the macro add-on balance which is something like your RRR (reserve ratio requirement) and this grants 0.0% interest. And tier 3 is the policy rate balance which is whatever funds in excess of these two tiers, and that is given an interest rate of -0.10%.

Not really a policy decision that affects the JPY but one which does impact Japanese banks in general. USD/JPY is currently trading near session lows - at 113.40 as the dollar is struggling against most major pairs today.

By continuing to browse our site you agree to our use of cookies, revised Privacy Notice and Terms of Service. More information about cookiesClose