(BOJ Review) Granular Insights into Depositor Dynamics and Deposit Spreads in Japanese G-SIBs' Foreign Currency Deposits

This paper delves into the dynamics of foreign currency deposits at major Japanese banks, specifically analyzing deposit spreads and lender stability. The study utilizes detailed data on deposits to examine factors influencing depositor behavior and bank financial health.

The findings reveal that recent growth in foreign currency deposits is primarily driven by existing non-Japanese depositors adding to their balances. This trend suggests a stable funding source for overseas lending activities of Japanese banks. Additionally, the expansion of transaction banking services is contributing to lower depositor attrition rates, longer deposit tenures, and reduced costs associated with acquiring new deposits.

By examining these key metrics, the study provides valuable insights for major banks and foreign authorities seeking to enhance the stability of foreign currency funding. The research emphasizes the importance of continued collaboration between financial institutions and regulatory bodies to refine monitoring methods and ensure the long-term sustainability of deposit funding for Japanese banks engaged in international lending.