Two years ago, the Wall Street Journal reported that while Japanese consumers enjoy a sophisticated payment system that includes debit cards and e-money, the use of cash was actually on the increase. In the mid-1990s, cash transactions accounted for a little less than 10 percent of Japan's nominal GDP. By 2012 the portion had risen to 19 percent. That's about twice the rate of cash use in other developed countries and three times the rate in the United States.
There are various reasons for this preference, an obvious one being Japan's storied public safety, but according to business consultant Yoko Kawaguchi, the older the Japanese person is, the higher the likelihood they will keep large reserves of cash at home. Many seniors live in residential areas where banks are not accessible, and even when there are banks nearby, they tend to feel uncomfortable with ATMs unless there's an employee on hand who can assist them if something goes wrong. Older people are also less comfortable with credit cards and less interested in Net shopping.
But the main reason for cash hoarding is a general distrust of financial institutions that has been widespread since just after World War II, when the government locked down bank accounts ostensibly to halt inflation, though the real reason was to count assets and then tax them in order to pay the interest on all the war bonds the government had sold. In the end they collected some ¥40 billion, and savings accounts weren't unlocked for two years. For years afterward, many people were afraid to put their money in banks.
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