BOJ Member Deposit Plan Would Unleash $373 Billion

The proposal by a Bank of Japan board member to scrap interest paid on lenders’ deposits raises the prospect of a flood of cash into a bond market where yields are near a nine-year low.

While Koji Ishida’s plan to abolish the 0.1 percent payment was rejected by a majority vote when a two-day meeting ended yesterday, incoming prime minister Shinzo Abe has called for unlimited easing until 2 percent inflation is achieved. The 10-year note yield slid for a second day to 0.765 percent today, third only to Switzerland and Hong Kong among the world’s lowest rates, as the BOJ expanded its asset-purchase program and held its separate overnight interbank lending rate at between zero and 0.1 percent.