* More than half of Japan's financial assets in cash,
* BOJ survey shows huge reluctance to risk cash by investing
* BOJ wants people to invest to build better pension pots
* BOJ holding seminars, urging better financial education
By Leika Kihara
TOKYO, Dec 15 Having spent more than three years
and trillions of dollars in a losing battle against deflation,
the Bank of Japan is hoping that a little financial education
will convince a nation of inveterate savers to put their cash to
More than half of Japan's 1,746 trillion yen ($15.2
trillion) in financial assets are held in cash or deposits,
compared with 15 percent for the United States, and even in
elementary school, nearly two-thirds of children save their
pocket money rather than spend it, according to a survey.
That attitude has resisted the BOJ's unprecedented monetary
easing programme, currently running at 80 trillion yen a year,
which was designed to lift prices, encourage consumption, and
get the economy moving after decades of deflation and
The programme has failed to achieve its goals, but the
central bank still wants to persuade savers to put their cash in
more productive investments, such as stocks, which should
provide better pension prospects for a population where 30
percent will be over 65 in 2020.
But even with returns on cash at zero, households cut their
stock holdings by 16.6 percent in June from a year earlier.
This year the bank conducted a comprehensive survey on
financial literacy targeting 25,000 households nationwide, and
the results showed less than a third had ever invested in
stocks, and 80 percent would not risk investing in assets with
potential for significant returns.
Now it is trying to chip away at that reticence by
organising free financial seminars and encouraging other
institutions to improve the nation's financial understanding.
"The survey showed strong risk-aversion is a key feature of
Japanese households," said Noriaki Kawamura, head of a BOJ group
promoting financial literacy.
"Financial education is important from the perspective of
shifting funds out of savings into asset management," said
Kawamura, who is also director of the Central Council for
Financial Services Information (CCFSI), a body administered by
the BOJ and which conducted the survey.
Financial literacy was identified by the G20 economies as a
policy priority after reckless lending to U.S. households led to
the subprime crisis that rocked the global economy last decade,
but Japan remains an international laggard.
Very few schools teach finance, and respondents in the BOJ
survey scored worse on comparable questions than U.S. peers, who
were three times more likely to have received some financial
"I would have loved to take a course, but the opportunity
was never there," said Sono Muro, a 42-year-old office worker
who said she only trusts cash and insurance products after the
That could now be changing.
Tabloids and television talk shows ran features on the BOJ
survey, which ranked Japan's 47 prefectures on financial
literacy scores, prompting local officials to act.
In the lowest-ranking prefecture of Yamanashi, bureaucrats
and schools are collaborating to enhance financial literacy.
In November, local financial entities conducted a series of
seminars organised by the regional branch of the BOJ's CCFSI to
help households prepare for retirement and invest wisely.
They also began assisting local universities on financial
"The survey really made everyone realise that something
needs to be done," said Atsushi Takeuchi, the BOJ's Yamanashi
branch manager, who is spear-heading efforts to enhance
financial literacy in the prefecture.
"It will take time for our efforts to bear fruit, but we're
doing whatever we can," said Takeuchi, who is asked to speak at
seminars on financial education about once a week.
Iwate prefecture, which ranked 31st in the list, also
increased high school financial education programmes and plans
to offer more university courses on financial literacy.
The BOJ plans to conduct a follow-up survey in the next few
years, partly to encourage prefectures to keep at it.
It will also renovate its website on Dec. 31 to make it more
accessible to non-financial professionals.
The hope is to have more people think like Seijiro Katsura,
a 44-year-old office worker who, despite a few past losses,
invests 40 percent of his savings in stocks to build up a
nest-egg for retirement. He is now interested in foreign bonds,
"I don't fret much about short-term losses and try to think
of it as a tuition fee to learn how to invest wisely," he said.
But some, including former BOJ official Nobuyasu Atago, now
chief economist at Okasan Securities, thinks the bank's teaching
mission could be wishful thinking.
"Financial education is important, but I wonder how much
change it will bring. If years of massive monetary easing didn't
change things, what could?"
And for others, the drive is just too late to overcome the
culture of a lifetime.
"The last thing I would do is to take on risk, even if
interest rates are this low," said Tetsuya Yamamoto, a
"Stocks move on factors you can't control, and that makes me
worried. I'm happy living off what I already have," he said.
($1 = 115.1700 yen)
(Reporting by Leika Kihara; Editing by Will Waterman)