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Target cash balance

    0.01 sec.
Target cash balance
Optimal amount of cash for a firm to hold, considering the trade-off between the opportunity costs of holding too much cash and the trading costs of holding too little cash.


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By starting to target cash balances held by financial institutions at the BOJ instead of the previous policy of targeting short-term money market rates, the central bank in effect reinstated the zero-interest-rate policy implemented between February 1999 and August 2000.
Amid growing deflationary fears and sagging stock prices, the BOJ decided at its March meeting to target cash balances held by commercial banks at the central bank in a major policy shift from targeting the key short-term interest rate.
In a move that signals a major policy shift, the central bank decided to target cash balances held by financial institutions at the BOJ, instead of the existing policy of targeting short-term money market rates.
 
 
 
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