ECON: Japanese savings switching to gold

From: Technotranscendence (
Date: Thu Jan 24 2002 - 04:52:02 MST

Japanese savings switching to gold

By Taizo Hirose, Takahiko Hyuga and Miki Anzai
Bloomberg News Service

TOKYO - Japanese consumers are buying more gold as they decide to take
their money out of banks before April, when the government caps its
deposit guarantee.

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I have a recommendation here. Short of adopting a free banking system,
Japan could phase out [government ] deposit insurance over the next few
years. The transition might be a little less painful that way, but the
long run result would be a more robust banking system. Why? Depositors
would evaluate banks based on the mix of risk and return -- rather than
not worrying about that up to the limit of the deposit insurance. It
could then move to other reforms in banking -- ones aimed at removing
other government interferences in the banking system as recommended by,
e.g., Kevin Dowd. (I don't think private deposit insurance would arise
or if it did arise it would become widespread. In the past, under
mostly free banking systems, risk of loss of deposit was mainly avoided
through asset management and prudent operation. Even if private deposit
insurance arose and became widespread, chances are the system would be
much better because depositors could evaluate banks based on their
insurance rating and coverage.)


Daniel Ust

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