How to End Japan's Deflation? Abolish Cash

choi

Andy Mukherjee, How to End Japan's Deflation? Abolish Cash. A national digital currency is an experiment worth trying. Bloomberg News, Aug 4. 2018
https://www.bloomberg.com/view/a ... lation-abolish-cash
(Governor of Bank of Japan Haruhiko KURODA 黒田 東彦 bought stocks of Japanese publicly traded companies. "Then, in early 2016, Kuroda embarked on an even bigger adventure to expunge the deflationary mindset of Japanese firms. Following the lead of Denmark, Sweden, Switzerland and the euro area, the BOJ embraced a policy of negative policy interest rates.  A year and a half of that experiment — not to mention more than 20 years of zero interest rates preceding it — has gone nowhere. * * * the jobless rate standing at a 26-year low of 2.2 percent * * * Even if the BOJ forces commercial lenders to park more of their surplus funds with it at minus 0.1 percent, it’s not so easy for banks to pass on negative interest rates to depositors. That's because people have an alternative that pays a guaranteed rate of zero percent: cash.  Japan is a highly cash-dependent society. The cashless payment rate is only 20 percent. As long as people's preference to hold physical yen isn’t forcibly changed, it may not be possible for the BOJ to continue its policy of negative interest rates indefinitely, given what it’s doing to the banks")

My comment: There is no need to read the rest, in part because there is no medicine for deflation in Japan and in part because the writer is a journalist -- I do not know his major but it is unlikely he has a PhD in economics. The article asserts that Japanese bank loses money by parking mmoney with BOJ (due to negative interest rate). Why will Japanese bank deposit money with Bank of Japan, the central bank? Why do the banks not hoard cash like consumers?  This article does saay BPJ forces Japanese banks to place money with it, but does not elaborate.