Granular Insights into Japanese G-SIBs' Foreign Currency Deposits:Characteristics and Stickiness

As major banks have increased their overseas lending, they have long regarded foreign currency liquidity risk as one of the key management risks and have made continuous efforts to enhance the stability of their foreign currency funding base. Against this backdrop, and in light of the international discussions triggered by events such as the collapse of Silicon Valley Bank (SVB), this paper analyzes the characteristics and stickiness of foreign currency deposits using granular data. The analysis shows that while the suppression of large, high-interest deposits has led to average deposit balance per account becoming smaller and diversified, the outstanding balance of transaction deposits, which can be acquired at low cost, has remained largely unchanged. Furthermore, the results indicate that deposit outflow rates and stickiness vary across depositor attributes. These findings also suggest that strengthening relationships with firms through acquisition of transaction deposits may contribute to enhanced deposit stickiness. Going forward, it will be important to deepen discussions with major banks and foreign authorities in order to further enhance major banks' foreign currency liquidity risk management.