Granular Insights into Depositor Dynamics and Deposit Spreads in Japanese G-SIBs' Foreign Currency Deposits

Major Japanese banks are increasingly focusing on foreign currency deposits for stable funding of overseas lending. Against this background, this paper provides a quantitative analysis using granular data on foreign currency deposits at major banks. Specifically, it decomposes recent developments in overall deposit balances into depositor dynamics to characterize their pattern, identifies factors affecting depositor attrition and tenure length, and examines the determinants of deposit spreads -- metrics for assessing deposit acquisition costs. The results confirm that recent deposit growth is driven by existing non-Japanese depositors adding to their balances. Furthermore, expanding transaction banking services that attract transactional deposits contributes to containing depositor attrition, extending tenure, and lowering deposit acquisition costs. Using these findings to engage in further discussions with major banks and foreign authorities will be important for enhancing foreign currency funding stability and advancing monitoring methods.