Money gauge up, time deposits down

The nation’s most closely watched money supply gauge rose 3.3 percent in September from a year earlier, while the balance of quasi-money — mostly in time deposits — showed a hefty 13.1 percent drop, the Bank of Japan said Thursday.

The average daily balance of M2 — cash in circulation, demand deposits and quasi-money — plus certificates of deposit came to 668.7 trillion yen, compared with a revised 671.2 trillion yen in August, the central bank said.

The balance of quasi-money totaled 319.3 trillion yen, following a 13.6 percent drop in August. It marked a record 13.8 percent drop in June.

Quasi-money refers to time deposits and other types of savings at banks that cannot immediately be cashed, including foreign-currency deposits and nonresidents’ yen deposits.

The balance of time deposits has been steadily falling, in step with a surge in the balance of demand deposits, before the government on April 1 imposed a 10 million yen ceiling on the guarantee for time deposits in the event of bank failures.

Many companies and individuals shifted time deposits into demand deposit accounts.

The balance of M2 plus CDs, held principally by corporations, individuals and local governments, is considered a solid indicator of changes in economic activity.

A breakdown of the data shows that cash in circulation rose 12.1 percent to 63.9 trillion yen in September, compared with a revised 12 percent gain in August, while demand deposits — ordinary deposits and checking accounts — soared 34.8 percent to 263 trillion yen, following a 37.1 percent rise in August.