Japanese People Could be Sitting on $300 Billion in Cash

The Japanese are hoarding over $300 billion under their mattresses and that cash will likely stay there unless a crisis of epic proportions sparks capital flight, analyst say.

“The money has been sitting there so long, it’s difficult to pin down what will prompt people to spend the cash,” Mizuho Securities’ chief market economist Yasunori Ueno told CNBC by phone.

The notion came to public attention last year when Finance Minister Taro Aso scolded the Japanese for sitting on 880 trillion yen ($7.33 trillion) in cash, which was widely reported by the local press as being ‘kept under mattresses’.

“It’s ridiculous – the money should be deposited at financial institutions so the banks can fund promising industries,” said Aso, according to a Sankei newspaper report.

But that figure was based on household cash deposits at Japanese banks, rather than hidden under mattresses, Ueno said. As per his calculations in a note dated March 25, households are probably hoarding around 36 trillion yen ($301 billion) of cash.

“It’s like an iceberg – it just won’t melt,” said Dai-ichi Life Research Institute (DLRI) chief economist Hideo Kumano. “It will just sit there, immobile and frozen in time.”

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza