Members of the Bank of Japan Policy Board suggested last month that the central bank consider lowering the target for the outstanding balance of current account deposits held by private financial institutions.

According to the minutes of the Dec. 16-17 policy meeting, one of the board’s nine members said that “a gradual reduction of the target range, after careful consideration of the timing, might be worth considering.”

The board ended up unanimously deciding to maintain the target.

The target range for the BOJ’s ultra-easy credit policy has been 30 trillion yen to 35 trillion yen since January 2004. Before that, the range was set at 27 trillion yen to 32 trillion yen.

The central bank has been supplying ample liquidity to the banking system under its so-called quantitative monetary easing policy since March 2001 in a bid to fight deflation.

The same member suggested reducing the target range in the future on expectations that the market will be less concerned about liquidity “following the upcoming full removal of blanket deposit insurance.”

The government plans to scrap its full guarantee on ordinary deposits under the deposit insurance system on April 1 because it believes the financial sector is ready to face the change. The change will cap the government’s refunds on individual bank accounts at 10 million yen when a bank fails, no matter how big the account was. At the moment, there is no cap and all accounts are fully guaranteed.

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