Japan’s central bank has added a record amount of funds to the country’s financial system in the aftermath of the earthquake and tsunami, and lenders’ deposits are poised to reach a record high, according to Bloomberg News. The Bank of Japan reported that deposits with the central bank are expected to reach an all-time high of ¥43.6 trillion on Tuesday after surging by an estimated 146% since the day before the earthquake.
Policymakers have pumped emergency cash into the economy on every business day since the disaster, and liquidity has exceeded the ¥36.4 trillion record set in March 2004 when the central bank was fighting deflation. Toshiaki Terada of Totan Research said, “The BOJ is firmly sticking to its promise of pumping a massive amount of cash into the banking system,” but added, “There is still a risk that cash demand from lenders will suddenly surge.” Daiwa Institute of Research economist Hiroshi Watanbe said, “The central bank is trying to prevent any business failures that could be caused by a shortage of cash,” as companies and individuals hoard cash following the crisis.
