Last but not least, in January 2016, the Bank of Japan (BoJ), which has seen the effects of its last stimulus package dissipate as a result of tax increases and slowing demand from China, cut the rate it offers on new deposits to –0.1%, from 0.1%, adopting a three-tier system for interest rates on excess reserves.
Under the planned three-tier scheme, the average outstanding balances of excess reserves that each financial institution held in 2015 will still have the current interest rate of 0.1%. This could be deemed the BoJ’s way of showing its consideration for financial institutions’ cooperation towards monetary base expansion via Quantitative and Qualitative Monetary Easing (QQE).