Japan’s Financial Law Board slams negative deposit rates as ‘unjustifiable’


The nation’s Financial Law Board has said in a report that financial institutions’ moves to impose negative interest rates on deposits or loans cannot be justified unless they have specific contracts with customers.

The report, released Friday, comes as some depositors worry that interest rates on their money could fall below zero following the Bank of Japan’s introduction of a negative interest policy.

It is commonly understood that deposit-taking institutions, not depositors, are to pay interest, the panel of experts noted. Therefore, it is impossible for depositors to reasonably interpret deposit contracts, which generally do not assume interest payment by depositors, as suggesting the possibility of institutions collecting interest from them by imposing negative rates, the board said.