The Bank of Japan announced a record ¥84 trillion was left undeposited at yearend. The total amount of cash kept at home or in offices, rather than deposited in banks, is up 2 percent from last year.

This amount of cash reflects the cautious attitude of Japanese toward the current economic situation and distrust in the banking system’s conditions. If banks offered better service and paid more interest, the over-reliance on cash would be greatly reduced.

Japan’s bank interest rate remains ultralow, offering little incentive to deposit money. Traditionally, keeping cash at home, the so-called tansu yokin (wardrobe savings), has always been a common practice in Japan, still a relatively safe country.

Another survey by Sompo Japan Insurance, though, found that the amount of hesokuri, cash and investments that housewives stash away without telling their husbands, has fallen every year since 2007. Seemingly, as the economy worsens, banks are considered even less of a safe haven.

The monetary policy of the Bank of Japan to continue to supply a large amount of cash in circulation may be an attempt to keep the consumer economy stimulated; however, that does not always increase consumer spending. Cash circulates based on many factors other than sheer availability.

After the tsunami, cash that had been stashed in households and safes was found among the rubble, about ¥5 billion, by some estimates. Most of it found its way back to owners, admirably, but much more must have simply been washed away.

The secreting of so much cash is a clear sign of distrust for bank deposits, credit cards and electronic transfers. Yet, it is also perhaps an indication of too strong a trust in cash. In the face of deep uncertainty over the future direction of the economy, cash in hand may seem a comfort.

But it is a far cry from the security of a stable economy. Having so much cash floating around neither boosts the economy nor offers genuine security.

Keeping a certain amount of cash in homes and offices in case of future disaster makes practical sense. However, hoarding cash can only be a short-term solution for much larger economic issues. Japan has remained a cash-based economy in many ways, but new methods of establishing — and expressing — financial security need to be found. Until the economy becomes more stable, and a sense of security returns, Japanese are unlikely to give up their hidden reserves of cash.

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