Japan's Safe Deposit Box Deposits Fall by 60 Trillion Yen... 2 Trillion Yen to Move with New Banknotes and Interest Rate Hikes

It has been revealed that 'safe deposit box deposits,' which have long been a problem in Japan, are decreasing. This is believed to be due to factors such as economic revitalization and concerns about tax evasion. At the heart of this decline in safe deposit box deposits is the new banknote scheduled for issuance on July 3rd.

Koike Rihito, Senior Researcher at SOMPO Research Institute Plus, said, "Already, about 400 billion yen in safe deposit box deposits have decreased since the beginning of 2024, and the total amount of safe deposit box deposits is currently estimated to be around 60 trillion yen. While there are few rational reasons to withdraw safe deposit box deposits due to the issuance of new banknotes, it is speculated that people are reducing their safe deposit box deposits due to a vague anxiety that 'the cash they possess will become old banknotes.'"

Based on data from the Bank of Japan, the figure below shows the year-on-year growth rate of the issuance volume (the total amount of banknotes in circulation) in a graph along with changes in deposit interest rates, with cases where the 10,000-yen note exceeds the 1,000-yen note considered as 'an increase in safe deposit box deposits' and cases where it falls below considered as 'a decrease in safe deposit box deposits.' While 1,000-yen notes are basically consumed for the most part, 10,000-yen notes are sometimes withdrawn for the purpose of 'saving.' Assuming this ratio, we estimated the amount equivalent to the so-called 'safe deposit box deposits' by subtracting the increase in 1,000-yen notes from the increase in 10,000-yen notes.

Koike explained, "In 2004, when the last new banknote was issued, there was a decrease of about 1.3 trillion yen, and this time, we expect a decrease of over 2 trillion yen in safe deposit box deposits. This is because this year is an unusual year with various factors contributing to a decrease in safe deposit box deposits."

The factors Koike points out as contributing to the decrease in safe deposit box deposits are (1) the Bank of Japan's lifting of negative interest rates leading to an increase in bank deposit interest rates, (2) inflation, (3) the issuance of new banknotes, and (4) the introduction of the new NISA. Explanations for (1) and (2) are likely unnecessary as they increase the disadvantages of safe deposit box deposits. Regarding the new NISA, Koike said, "According to a survey by the Central Council for Financial Services Information, the average financial asset holding of two-person or more households with financial assets is 17.58 million yen (the median is 7.15 million yen). There is a possibility that the movement to shift safe deposit box deposits to investments to make full use of the new NISA limit will become stronger."