The Bank of Japan Experiment For my paper I would like to talk about Japan’s recent move in the economy. Currently, the Bank of Japan has been experimenting with negative interest rates as a new way to boost their economy. I will be using two articles to talk about this current event, in this paper. My main article that I will be using is “Japan’s Negative Interest-Rate Experiment Is Floundering” and my second article is called, “Everything You Need to Know About Negative Rates” will help supplement the first article so that we can a better understanding of negative rates. I believe that this subject relates to a lot of the things we have talked about in class during the course of this semester. I will underline these subjects as I write my
…show more content…
In “Japan’s Negative-Rate Experiment Is Floundering” the two authors talk about the Bank of Japan’s experimenting with negative interest rates and the results have been the opposite of what they have hoped for. Although Haruhiko Kuroda, Japan’s central bank governor remains optimistic about the situation, other people believe otherwise or are too unsure of what is going to happen with the markets. Mr. Tomohisa Fujiki, “head of interest – rate strategy at BNP Paribas Securities Japan” says that ‘every day is like being Alice in Wonderland’ to describe how unpredictable the situation is right now (Person and Warnock). I will explain more of this later, when I talk about how this all relates to what we’ve learned in class. In the second article, it simply summarizes all we need to know about negative interest rates and how it affects various parts of the global …show more content…
This again comes from the yen being appreciated and that it has reestablish itself as a strong currency that investors can trust. Interestingly enough, the “demand is coming from an unusual source” (Person and Warnock). They are coming from “foreign investors, who in the past have largely stayed out of the low-yield market but have recently jumped in because of rising returns on Japanese-bond trades thanks to the cheaply funded yen” (Person and Warnock). It was reported that these foreign investors bought “a net ¥18.3 trillion worth of Japanese government bonds” back in February, which was 16% more than January’s total (Person and Warnock). The reason why investors are staying away from the money markets is because there is nothing to back their investments up if something were to happen. Naomi Muguruma, “strategist at Mitsubishi UFJ Morgan Stanley Securities,” says that ‘if the money market dries up’ and ‘an event like the Lehman crisis’ were to happen again, then there would be nothing for the banks to raise its capital on and interest rates would most likely ‘rise sharply’ (Person and
In “Japan’s Negative-Rate Experiment Is Floundering” the two authors talk about the Bank of Japan’s experimenting with negative interest rates and the results have been the opposite of what they have hoped for. Although Haruhiko Kuroda, Japan’s central bank governor remains optimistic about the situation, other people believe otherwise or are too unsure of what is going to happen with the markets. Mr. Tomohisa Fujiki, “head of interest – rate strategy at BNP Paribas Securities Japan” says that ‘every day is like being Alice in Wonderland’ to describe how unpredictable the situation is right now (Person and Warnock). I will explain more of this later, when I talk about how this all relates to what we’ve learned in class. In the second article, it simply summarizes all we need to know about negative interest rates and how it affects various parts of the global …show more content…
This again comes from the yen being appreciated and that it has reestablish itself as a strong currency that investors can trust. Interestingly enough, the “demand is coming from an unusual source” (Person and Warnock). They are coming from “foreign investors, who in the past have largely stayed out of the low-yield market but have recently jumped in because of rising returns on Japanese-bond trades thanks to the cheaply funded yen” (Person and Warnock). It was reported that these foreign investors bought “a net ¥18.3 trillion worth of Japanese government bonds” back in February, which was 16% more than January’s total (Person and Warnock). The reason why investors are staying away from the money markets is because there is nothing to back their investments up if something were to happen. Naomi Muguruma, “strategist at Mitsubishi UFJ Morgan Stanley Securities,” says that ‘if the money market dries up’ and ‘an event like the Lehman crisis’ were to happen again, then there would be nothing for the banks to raise its capital on and interest rates would most likely ‘rise sharply’ (Person and