In 2016,the Bank of Japan
A) started paying interest on bank reserves in an effort to lower inflation.
B) raised the target interest rate to double digits for the first time in over 10 years.
C) implemented a reverse quantitative easing program, where it sold long-term Treasury securities and mortgage-backed securities to raise long-term interest rates.
D) instituted a negative interest rate on deposits it receives from Japanese banks, effectively requiring banks to pay the Bank of Japan for keeping their deposits.

Question

Quizplus · Accepted Answer

In 2016, the Bank of Japan instituted a negative interest rate on deposits it receives from Japanese banks, effectively requiring banks to pay the Bank of Japan for keeping their deposits. This move was aimed at encouraging banks to lend and stimulate economic growth, as it would be more expensive for them to hold reserves with the central bank.