Japan's Negative Interest Rates Are Driving up Sales of Safes


This is where some Japanese savers would rather put their money.Photograph by Moodboard — Getty Images/Cultura RFThat’s not great news for the Bank of Japan.
The Japanese are spending—but not in a way that is likely to strengthen the country’s economy.
Following the Bank of Japan’s decision to lower interest rates below zero in January, many consumers have reportedly rushed to hardwares store in search of one thing: safes.
Negative interest rates mean customers effectively pay a fee for parking cash in banks, so Japanese citizens are beginning to hoard yen, according to the [FONT=Miller Display Italic]Wall Street Journal, and they need somewhere to put it.[/FONT]
Sales of safes have doubled from the same period a year earlier at chain hardware store, Shimachu, according to the [FONT=Miller Display Italic]Journal. The chain has already sold out of one model worth $700. Others savers are considering more unconventional storage spaces.[/FONT]
Japan’s Negative Interest Rates Are Driving up Sales of Safes - Fortune

Can you imagine that the effect of negative interest would have here? Banks already charge fees for everything including not using your account enough to suit them. I was at a bank just the other day and they wanted a $5 fee to print out a bank statement that had been lost somewhere in the mail and never received.

As it is, interest is so low that one can have thousands in the banks and make virtually no interest at all. Many people depend on not only their social security or other income plus any additional income to supplement their livelihood.


Where does that excerpt you quoted come from? That article is suggesting quite opposite:

Gabriel Stein, an analyst with Oxford Economics in London, said in a research note Thursday that negative rates are likely to become an established piece of the global financial furniture, given that the adverse effects that many expected hadn’t materialized. Stein pointed out that there hasn’t been a big rise in demand for cash at the expense of bank deposits, and banks haven’t generally tried to pass the higher costs that they incur through the policy by raising lending rates for new borrowers.

This has three main implications, Stein argued.

“First, more central banks are likely to use negative interest rates if underlying economic conditions worsen, not just now but in future downturns as well,” he wrote. “Second, those central banks that currently have negative interest rates are unlikely to be in any hurry to move them back into positive territory.”


Well, then these people aren’t very smart, since inflation is higher than the bank interest rate.


Are you sure you even read the article? The drivel you are implying is disingenuous to say the least. If a bank charges you more in fees plus interest one is losing money. From personal experience I can tell you about getting .30 cents in interest and being charged $30 in fees for not having enough activity on the account.

My experience is also shared by others and if we go to negative interst even more will be taken out of accounts. People can have more than one account in various banks some which may be CD’s or other money accounts and if the bank decides to reduce the amount of principal in that account then they are not earning revenue but seeing their savings dwindle as well as any interest they hope to have to supplement their retirement or regular income.

What next we start confiscating people’s accounts because the government needs it to fund their latest endeavors and largesse at the expense of the people?

Right now only the price of gas is down and everything else is going up. Having your money erode away before your eyes and the pain that ensues for some being driven out of their homes means little to high spending politicians.


I quoted from it; so where did YOUR excerpt come from?

The article you posted said it’s working, where’s the article talking about buying safes?

The drivel you are implying is disingenuous to say the least.

It’s from your article. I didn’t imply a damn thing.


…? That applies to us too. We don’t have +3% interest rates.


First, unless someone can correct me, negative interest won’t affect the average savings account with a few thousand dollars or, at least this is the case anywhere negative rates have been tried, this is the case for the reasons that Sam cites. They don’t want the average person emptying their account. Corporations like Apple that hold billions in cash will be the target and will be most affected. Now could the Fed charge negative rates to everyone, sure, the Fed can do whatever it wants, but I seriously doubt it. Of course the affect will also be felt by banks some of whom hold large cash reserves. It is banks that I suspect are the primary target.

Now having said that, I’m not suggesting that everyone will be free from the affects of negative interest. If it causes corporate losses it’s hard to imagine they won’t be passed on to consumers. It will just be hidden and frankly you will never know it, but I don’t see (hypothetically) Sam being charged $12.50 on his $5k savings balance (not to mention a good safe costs $500+ and at that rate you could just keep your $$$ in the banks and consider the $5-$20 a month in negative interest, assuming it hit everyone, as renting the banks vault ass it would take several years before you spend enough in rent to buy your own safe).

How many of you have said in the past that you can’t go lower than zero on interest rates?..hmmmmm

Negative interest rates are just QE on steroids. The question is why do this? Well the reason they are doing it is sourced in the fundamental misunderstanding of the fiat monetary system. Banks do not lend because they have reserves. They get reserves because they have lent! Loans create deposits and then reserves are added…Anyway…

The hope is that by charging banks for saving their money, rather than paying them, it will encourage them to increase their lending to individuals and businesses, boosting the economy. It also hopes that it might encourage them to divert the money into other assets, such as government bonds or even highly rated corporate bonds. This would bring down bond yields and act as an stimulant.

That is the theory, however, the reasoning is a little more complex than this though. The interest rate being adjusted is a nominal rate (that is, how much money is changing hands) rather than a real rate (that is, what is the equivalent of the money changing hands in purchasing power terms). The real interest rate is the nominal rate minus the inflation rate.

In the end, banks will not lend if there are no credit-worthy customers lining up for loans. The logic surrounding the negative interest rate move is based on the erroneous belief that the banks need reserves before they can lend. That is a major misrepresentation of the way the banking system actually operates. But the mainstream position asserts (wrongly) that banks only lend if they have prior reserves. The illusion is that a bank is an institution that accepts deposits to build up reserves and then on-lends them at a margin to make money. The conceptualization suggests that if it doesn’t have adequate reserves then it cannot lend. So the presupposition is that by adding to bank reserves, quantitative easing will help lending.

But bank lending is not “reserve constrained”. Banks lend to any credit worthy customer they can find and then worry about their reserve positions afterwards (a banks true constraint is its capital position). If they are short of reserves (their reserve accounts have to be in positive balance each day and in some countries central banks require certain ratios to be maintained) then they borrow from each other in the interbank market or, ultimately, they will borrow from the central bank through the so-called discount window. They are reluctant to use the latter facility because it carries a penalty (higher interest cost).

The point is that building bank reserves or penalizing them for holding reserves will not increase the bank’s capacity to lend. Loans create deposits which generate reserves.

The reason that the commercial banks are currently not lending much is because they are not convinced there are credit worthy customers on their doorstep. In the current climate the assessment of what is credit worthy has become very strict compared to the lax days as the top of the boom approached.


The goal of negative interest rates on reserves is to push money out of central banks into economies. If there are not credit worthy private borrowers, government bonds are usually safe alternatives. The ECB has had negative rates for awhile (ECB: Key interest rates).

A good project for excess reserves is deploying a national fiber optic network providing television, telephone and internet. If Comcast et. al. will not make the capital investments necessary to update old infrastructure, then federal grants (financed by US Treasury bills, notes and bonds) to local governments to deploy a fiber optic network will suffice.


This is cautioned by at least two things:

  1. Right-sizing the network to demand.

  2. Execution.

The United States Government thought for decades that building up the Civil Aviation infrastructure was a crucial mission, partly because of transportation needs, partly because of air defense needs.

While defense may have gotten it’s use out of the airports and fields we built; transportation has since greatly suffered due to massive overcapacity, and misappropriation of resources.

Civil Aviation has been in decline for 3 decades, as most of the airports we built have proved unneeded by the economy or undesired by the people living close to them.

Our initial experience with fiber optic networks, deployed by governments, has not fared much better. There, I’d say it’s far more to do with execution, and above-market costs, but overcapacity equally still hangs about.


It fared very well in Chattanooga, TN (Chattanooga EPB). Bristol, VA is another example (BVU).


The Chattanooga project hasn’t done as well as planned. At the moment it has cost about $9,000 per customer. They expected subscription rates to be about 4x what they have been. As a result, the project isn’t even close to recouping on investment. At this rate, it would take 15-20 years to pay for itself.

The only way it’s going to break even, is if they’re allowed to expand it outside the heart of Chattanooga. The backbone of the system was a huge part of the cost, and 150,000 potential customers is just not enough. If they can expand it to Red Bank and Cleveland it could make a positive difference(though still not enough to hit the targets).


Deploying fiber optic networks is capital intensive. It requires long-term debt of fifteen to twenty years. The Chattanooga example is not a bad example. Read the financial statements in the annual reports.

EPB 2014 Annual Report

EPB 2015 Annual Report

Huntsville, AL is an example of public-private partnerships to deploy fiber optic networks (Google Fiber Blog: Working with Huntsville to connect more people).


Now I’m not familiar, with what you speak of, so I’ll just ask…

Out of curiosity, what resources ran short due to misappropriation of resources?

You use the term “suffering”. Without trying to be snarky, that seems a strange adjective to use to describe such a general category of the economy. Can you quantify that suffering?

As far as the decline of civil aviation, I haven’t looked it up (though my mother in law sells aviation insurance for Avemco, I might ask net time I see her), so let’s say I concede that it is in decline. Are you asserting that it’s in decline because to many small airports were built?

Lastly, where do you suppose the money came from to pay for them?

Being in IT I can tell you, the biggest problem with deploying network infrustructure on a WAN scale is the initial cost and the fear that it will be made obsolete before the companies that pay for them get their ROI. Fiber-over-Ethernet, wireless, localized cloud deployments, de-duplication, compression and software based compute and storage arrays are keyed on trying to limit the need to expensive fiber by localizing resources and limiting what you have to send over the wire (for things like remote sites and disaster recovery). It’s extremely hard to predict what the need or even the technology will look like as little as 5 years from now.


It didn’t in Provo, UT , Marietta, GA , Philadelphia, PA, Charlotte, NC , Burlington, VT or likely will it in Newark, DE where it’s 1 of 17 providers in the city.

The track record thus far is poor. Chattanooga is aided by the fact it just started, and had all of its $111 million capital costs paid for by the Federal Government; which is not a sustainable practice. Not only is it unaffordable for the Federal Government to keep backing cities this way, when Chattanooga inevitably needs to upgrade that infrastructure, there’s precious little the city will be able to do on its own.