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.

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