Japan—Money
Money, in the classical definition, is any object that serves as a convenient means of payment or settlement. The financial assets that have been judged convenient by Japan's monetary authorities have varied over time with tastes, technology, institutions, and purpose; they have included bolts of cloth and bushels of rice. In the immediate postwar period, the most common definition of money was "cash currency in circulation" (bank notes and coins in circulation less vault cash in financial institutions). By 1955, the official definition was expanded to include "deposit money" (demand deposit minus checks and notes held at surveyed institutions). M1, or "narrow money," consists of cash currency plus deposit money. M1, which continues to be monitored by the Bank of Japan, is closely correlated with currency income and expenditure.
In 1967, recognition of the high degree of substitutability between demand and other deposits led to official recognition of "quasi money" (total deposits, less demand deposits, at surveyed institutions). Quasi money includes time deposits, deferred savings, installment savings, nonresident yen deposits, and foreign-currency deposits. M2, or "broad money," consists of M1 plus quasi money. The introduction of certificates deposit (CD) in 1979 provided another type of "near money." Since then, the most commonly used definition of money has been M2+CD.
In recent years, globalization and information technology have improved the liquidity of financial products. M3+CD has drawn increasing attention. M3 consists of M2 plus postal deposits (deposits made to savings account run by the Japanese post office), trust accounts, and deposits at various cooperative-type financial institutions. Since 1989, a variety of high liquid financial assets have been included in "broadly defined liquidity," the broadest category of official money.
Japanese money has several distinctive features. Consistent with a historical preference for cash payments, ordinary households do not use checkable deposits (deposits upon which a check can be written). Due to an efficient electronic payment system, payments by check constituted a mere 5 percent of non-cash payments in 1997. Postal savings deposits in household portfolios, are an important part of broad-based money. In 1998, they made up 23 percent of M3+CD.
Further Reading
Bank of Japan. (2000) Guide to Japan's Money Stock Statistics. Tokyo: Bank of Japan.
Japanese Bankers Association. (2000) Payment Systems in Japan. Tokyo: Japanese Bankers Association.
Suzuki, Yoshio. (1987) The Japanese Financial System. Oxford: Clarendon Press.
This is the complete article, containing 379 words
(approx. 1 page at 300 words per page).
