First of all, the call money rate declined to very close to zero at 0.001%. The rate on one-year government bills declined below 0.01% and, since summer last year, the long-term government bond yield has stayed at a historically low level of 1.3-1.5%. Turning to ‘quantity,’ the current account balance at the Bank of Japan has increased to 15 trillion yen.
You may not fully appreciate how large this figure is. The amount of reserves legally required to be held is only 4 trillion yen. Thus, financial institutions are holding 11 trillion yen in excess liquidity without earning any interest.