TOKYO (Thomson Financial) - Japan's monetary base fell 0.2 percent to 87.94 trillion yen ($814.3 billion) in August from a year earlier, marking the second straight monthly decline, the Bank of Japan said on Tuesday.
In March 2006, the monetary base dropped for the first time in more than five years after the central bank abandoned its policy of flooding the short-term money market with extra liquidity to counter deflation.
Since then the monetary base continued to decline as the Bank of Japan steadily drained surplus funds from the short-term money market.
Until March 2006, the total funds of Japanese commercial banks kept in current accounts at the central bank amounted to 30 trillion yen, which the central bank gradually reduced to below 9 trillion yen by August of that year.
The total funds of commercial banks kept in current accounts at the central bank fell 10.1 percent to 7.80 trillion yen in August, declining for the 30th consecutive month.
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