TOKYO (Reuters) -The Bank of Japan will consider reviewing a scheme aimed at revitalising regional banks, the Nikkei newspaper reported without citing sources, in a move to avoid payouts to banks to increase excessively.
Under the BOJ’s scheme to revitalise regional financial institutions, regional banks — if certain conditions are met such as merging and streamlining costs — will receive 0.1% interest on their current accounts at the central bank.
It has prompted regional banks to aggressively tap funds from the call money market to shift into their accounts at the BOJ.
Their robust fund demand has pushed up the overnight call rate – Japan’s key money market rate – close to 0%, despite the central bank’s pledge to keep short-term rates at around -0.1%.
(Reporting by Daniel Leussink, Leika Kihara and Tetsushi Kajimoto; Editing by Kim Coghill)
