Japan plans to raid dormant bank accounts to raise new revenue

Infamously saddled with a public debt that is running at an eye-watering 214 per cent of GDP, the Japanese government is planning to raid dormant private bank accounts to boost its bottom line.

The ruling Liberal Democratic Party and its main ally in government, New Komeito, are planning to submit a bill to allow the government to access bank accounts that have not been touched for 10 years or more. The funds would be used for welfare and education projects.

Accounts holding some 85 billion yen (HK$6.3 billion) are classified as dormant each year, with depositors who are notified of the situation reclaiming about 35 billion yen.The new legislation would therefore free up about 50 billion yen each year.

That however is dwarfed by the debt, which exceeded 1,000 trillion yen last year - that's a million billion.

The bill is likely to sail through the legislative process with the backing of the opposition as a similar suggestion was put forward by the equally desperate Democratic Party of Japan when it was in power. That plan never came to fruition as the DPJ focused its efforts on attempting to hang on to government. One stumbling block was the anticipated cost of managing the system, while questions were also raised by the powerful banking lobby about the propriety of using depositors' assets.

The banking sector is unlikely to be delighted that the plan has been resurrected as at present the contents of moribund accounts are listed as the banks' profits.

Their objections will be over-ridden, however, and the plan is for the funds from dormant accounts to be transferred to the government-run Deposit Insurance Corporation of Japan. A new body set up within the corporation will then scrutinise requests for financial support from education and social welfare organisations and allocate appropriate amounts.