Japanese Companies and Households Continue to Pile Up Cash

(Bloomberg) -- Japanese households and companies continue to hold onto cash rather than spending or investing, highlighting the ongoing challenge to revitalize the economy.

Households held 920 trillion yen ($9.1 trillion) of their assets in cash or deposits at the end of the quarter through June, the second-highest level on record, a report by the Bank of Japan showed Monday. Corporate cash and deposits stood at 242 trillion yen, an all-time high after a revision of data for previous periods, according to the report.

The figures indicate that the central bank’s unprecedented monetary stimulus has yet to bring much fundamental change to the behavior of households and companies. With its inflation target still distant, the BOJ on Sept. 21 shifted the focus of its policy from expanding the money supply to controlling the yield curve and interest rates.

The central bank held 36 percent of Japan’s sovereign debt and treasury bills as of the end of the second quarter, while overseas investors held 10 percent, Monday’s report showed.

“Households and companies tend to pile up a lot of cash and we don’t have an environment where you can see a major change in that trend,” said Masaki Kuwahara, senior economist at Nomura Securities Co. in Tokyo. “The economy is stagnant.”

--With assistance from Masahiro Hidaka To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net. To contact the editors responsible for this story: Brett Miller at bmiller30@bloomberg.net, Enda Curran

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