BoE Deputy Governor Sam Woods sent as letter to banks asking for their readiness on negative interest, as it could be an option to take based on current situation.
“We are requesting specific information about your firm’s current readiness to deal with a zero Bank Rate, a negative Bank Rate, or a tiered system of reserves remuneration – and the steps that you would need to take to prepare for the implementation of these,” Woods said in a letter.
“We are also seeking to understand whether there may be potential for short-term solutions or workarounds, as well as permanent systems changes,” he said.
BoJ Amamiya: Difficult challenge is to determine whether exit conditions are in place
BoJ Deputy Governor Masayoshi Amamiya told the parliament that the central bank has already shifted to a “sustainable monetary easing framework”. Thus, it is “appropriate to maintain current policy given underlying price moves.”
But he also noted that BoJ has “sufficient operational tools” to achieve a smooth exit from ultra-loose monetary policy.
“The difficult challenge for the BOJ is to determine whether conditions have fallen in place to exit, and how to communicate (its policy intention) to the market,” Amamiya added.