August 17, 2004

CHANGE IT, WE HAVE NO IDEA HOW:

How will postal privatization help? (The Japan Times, Aug. 18, 2004)

Japan's postal savings system, along with mail and insurance services, is to be privatized over a 10-year period beginning in 2007, according to the guidelines drawn up by the government's Economic and Fiscal Policy Council earlier this month. The question is how to transform the system into a viable institution that can compete with commercial banks on a level playing field.

Admittedly, bigness and inefficiency are the twin problems of the "yucho" (postal savings) system. Originally, the yucho was intended for small savers, with per capita deposits limited to 3 million yen. Beginning in the late 1980s, however, the ceiling was raised in stages to the current level of 10 million yen. The balance of postal deposits now exceeds 230 trillion yen, creating distortions in the financial system.

Privatizing such a gigantic deposit network will not be easy. That helps explain why the council, while setting a timetable for privatization, seems unable to work out a plan of action.


While Americans pump their savings into 401k's, IRA's, their houses, etc., the Japanese plop theirs into these moribund postal accounts.

Posted by Orrin Judd at August 17, 2004 9:09 PM
Comments

You want they should put them into their even more moribund banks?

Posted by: Robert Schwartz at August 18, 2004 12:45 AM

Criminey! That's $2.3 TRILLION dollars. How are they going to liquify that?

Posted by: Mike at August 19, 2004 7:29 AM
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