Japan Cracks? Questions Over Monetary Policy Grow

This story came out a few days ago, I'm surprised it didn't get more press, but the Fed meeting likely overshadowed. Next week will be the G20. This story sounds like it might be bigger than both.

Reuters: How Japan turned against its 'bazooka'-wielding central bank chief
Three years on, there is a broad consensus that Japan’s experiment in shock-and-awe monetary policy has failed. An intense debate is under way within the BOJ over why Kuroda’s assumptions about how he could fundamentally change the trajectory of the economy proved wrong and what the bank’s next steps should be. The picture that emerges is of a central bank under pressure and at a moment of reckoning.

...Japan’s banks have lobbied energetically against Kuroda’s policies. Under Kuroda, the BOJ has flooded Japan’s economy with so much cash that the average interest rate on new loans has cratered, cutting the banks’ margins. Big banks have shuttered branches, while smaller banks have struggled to merge.

Under pressure, some banks are scrambling to diversify. One remarkable example: In western Japan, Yamaguchi Bank says it is renting out space at one of its branches for a wine bar that is slated to open next month. The bet is that diners might also open an account or take out a loan, the bank says.

In April, the BOJ issued a warning for the first time in almost three decades that financial institutions were at risk of over-extending loans to real estate borrowers as they chased returns.

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