Financial Services Minister Hakuo Yanagisawa said Friday the government may extend its full guarantee on ordinary bank deposits until banks adjust their computer systems for a proposed new settlement-specific bank account.

Asked if the government may delay imposing a 10 million yen ceiling on the amount of each deposit it guarantees, Yanagisawa said, “The idea would not be excluded.”

The ceiling — considered a key reform that would allow market conditions to enliven a hobbled banking sector — is set to take place April 1.

Yanagisawa said the government will make a decision on introducing the refund cap after consulting with financial institutions.

It has been reported that banks are reluctant to introduce the government-proposed settlement-specific account.

The government now appears to be leaning toward the idea of putting off the imposition of the 10 million yen limit on ordinary deposits and checking accounts but imposing the cap on all other types of liquid deposits as scheduled.

The idea of delaying the refund limit has been floated following recommendations unveiled Thursday by the Financial System Council to permanently protect settlement-specific accounts, to which many depositors may shift their money from ordinary deposits.

The settlement-specific accounts would earn no interest — a small price to pay for full protection since ordinary deposits only earn 0.001 percent.

The council, an advisory panel to the prime minister, said in a report of recommendations that new interest-free, settlement-specific bank accounts and the existing checking accounts should be fully guaranteed by the government after the imposition of the 10 million yen cap.

Yanagisawa said he explained the proposals at his meeting with Prime Minister Junichiro Koizumi after a Cabinet meeting Friday morning.

Talking to reporters later, Koizumi said he told Yanagisawa to take steps to avoid confusion in the nation’s financial system.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.