Banking reform in Japan continues to disappoint. The general perception is that both authorities and banks are mostly taking stopgap measures, such as the Bank of Japan's plan to buy bank shares. Another notable example of expediency is the de facto reversal of the government decision to abolish full deposit protection beginning next April. Plans in the works call for indefinite protection of interest-free business accounts for settlement purposes.

The Financial System Council, an advisory body to the prime minister, has recommended a permanent full refund guarantee for business checking accounts. The panel has also proposed creating zero-interest savings accounts that would also enjoy full protection. The panel says settlement accounts should be fully protected against bank runs in order to avoid disruptions in business transactions.

The original plan was to lift the unlimited deposit guarantee for most types of bank accounts in April this year. As it turned out, the 10 million yen cap was revived only for fixed-term deposits, while demand deposits were granted a grace period of another year through April 2003. Now the moratorium is expected to be extended further to September next year, on the grounds that extra time is required to complete preparations for the proposed changes.