In Transformational Shift, the BoJ Gives Up on Negative Rates as it Now Pays Banks to Lend

from Zero Hedge

After more than half a decade of disastrous monetary policy which not only failed to stimulate inflation, boost exports or crush the yen, but has brought Japan’s banks to near disaster, the Bank of Japan has come up with an “ingenious” new plan to flood the system with liquidity: it is paying banks hundreds of millions of dollars in bonuses to boost lending, a move analysts say is aimed at easing the side-effects of its negative interest rate policy.

And while record bank lending in recent months suggests the BOJ’s plan is working – a very rare success of late in its losing battle to revive the economy – according to Reuters it is also a sign that policymakers’ focus is now more on supporting banks, rather than keeping rates low.

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