Japan’s households and businesses continue to accumulate cash at record pace as pandemic persists By Reuters

By Leika Kihara TOKYO (Reuters) – Japan’s currency and bank deposits rose at a record pace in December, data showed on Wednesday, as a resurgence in coronavirus infections pushed businesses and households to keep accumulating cash instead of spending it. The numbers highlight the challenge the government faces in trying to contain the virus without threatening Japan’s already fragile economic recovery. Prime Minister Yoshihide Suga is expected to announce an extension of the state of emergency measures beyond Tokyo on Wednesday as COVID-19 infections continue to rise. Japan’s stock of M3 money, or currency in circulation and deposits in financial institutions, rose 7.63% in December from a year earlier, marking the largest increase on record, data from the Bank of Japan showed. The increase slightly outpaced a 7.59% gain in November. Businesses continue to accumulate deposits as a precaution against the pandemic, while households are putting off spending due to uncertainty about the outlook, a BOJ official said in a briefing. Japan’s economy has been recovering moderately, after suffering its biggest postwar slide in April-June last year due to restrictions placed on economic activity to contain the virus.

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