Interest Rate :: essays research papers

The Bank of Japan (BOJ) carried show up the zero provoke account insurance. The minify of the interest rate was expect to work for reco real of the Nipponese rescue. The interest rate was already very low and the analysts wonder its effectiveness. Due to the collapse of the bubble economy, the Japanese economy became sluggish and suffered from six trillion dollars debt. The increase of the regimen bonds caused the increase of the loan rte. It also caused the appreciation of yen and damaged the Japanese export companies because the stocks of the Japanese export companies were increasingly sold. Because the Japanese economy is largely supported by the Japanese export companies, this situation worked against Japan.In January, 1999, the Japanese government issued double as much government bonds as usual. Soon later, the BOJ decided to decrease the interest rate to zero in short-term money market. Consequently, life sentence insurance companies, which lent money to banks and ear n money by its interest before, were forced out of business in short-term money market. brio insurance companies instead began to subvert government bonds. Due to the increase of the aim of the government bonds the value of the government bonds remained the same even though the government issued bonds too much. As a result, the interest rate did not go up and money supply did not decrease. The zero interest rate policy was to some extent successful this time, but the interest rate cannot be decreased more than zero when the value of the government bonds decreases next time. Besides, around companies did not borrow from banks to invest new facilities even the interest rate is zero. Most companies had to downsize the organization and reduce employees and corporate bonds to survive in the recession. stock-still if they started new business and made new goods, Japanese consumers would not buy such things.