It is effectively a tax on bank borrowings from the market, with short-term funds carrying twice the charge (0.04% next year, 0.07% thereafter) of those that are repayable after more than one year.

Once Japan's Banks were seen as tainted, they were unable to raise funds in the short-term money markets.

Financial markets are now expecting a 0.5 percent reduction in the short-term fed funds rate when the Federal Reserve policy-making committee concludes a two-day meeting on January 30th.