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Q.
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With respect to the deposit cap at the Japan Post Bank, some press outlets reported that its cap will be doubled, with a limit of 13 million yen each for ordinary savings accounts and fixed-term deposit accounts. Some regional financial institutions have been complaining that this will put pressure on private-sector financial institutions. What is your view on this?
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Japan Post Bank is asking that the current combined cap on ordinary savings accounts and fixed-term deposit accounts of 13 million yen be doubled, but this could mean that the deposits now held by the Japan Post Bank could be doubled. Where will they invest it?
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Japan Post Bank will find somewhere to invest.
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They might try to lend it out, and if so, their ability to screen prospective borrowers should be reviewed. They will probably have no choice but to put that money other than a current account at the Bank of Japan (BoJ). What is the current interest rate at the BoJ?
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It is 0.34%.
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This is a dubious answer. Any amount above the limit will be subject to negative interest rates. Who will bear that? Who will pay for it? They need to give us an answer. Consequently, they will not be able to go ahead unless they give us concrete operational details in their investment. As was just mentioned, the premise is the Japan Post Bank has been privatized; What percentage of shares of the Japan Post Bank does the government hold? The Japan Post Holdings has just under 90% of the Japan Post Bank, which is not recognized as that the Japan Post Bank has been fully privatized. Some regional banks are saying, “That’s not what we were told about privatization.” We first need to have Japan Post Holdings consider reducing its share of the Japan Post Bank by one-third from 80-something percent to 66%. If not, it is our perspective that a huge government-owned bank increasing the cap of its deposit may put further pressure on private-sector financial institutions. Issues such as how they will try to collect deposits at local post offices and where these new deposits will be invested need to be properly sorted out before we can proceed any further. In my view, making up the deficit with taxpayer money would be quite preposterous.