A state panel on Monday urged the Bank of Japan to swiftly impose an upper limit on interest rates for ordinary bank deposits, government officials said.
A subcommittee of the Financial System Council, an advisory body to the prime minister, said the step should be implemented between April 1, when full government guarantees on time deposits at banks are scrapped, and March 31, 2003, when such guarantees are nixed for ordinary deposits as well.
The limit proposal is aimed at preventing banks from luring their weaker competitors' depositors with higher interest rates.
The BOJ's Policy Board is expected to accept the proposal. If it does, it would be the first interest rate cap placed on bank deposits since their liberalization in October 1994.
On April 1, a 10 million yen limit per individual will be imposed on time deposits.
The same cap will go into effect for ordinary deposits a year later.