Bank of Japan:Why does Japan not getting hyperinflation after printing so much money through quantitative easing? Where did all the money go?

Which of the following is a depository financial institution

I share Jim Seidmans view that large percentage of new bank reserves created from Bank of Japans asset purchase program (QE) have been kept in corresponding depository institutions reserve accounts held at the Bank of Japan.

,Bank of Japans money printing is implemented in the following steps (very similar to Federal Reserves QE programs):,Bank of Japan creates electronic ledgers of new funds that did not exist,Bank of Japans trading desk uses these new funds to buy Japanese government bonds (JGBs) from dealers (banks) on the secondary market,Banks receive the electronic funds, and they are deposited in each banks reserve account at Bank of Japan,Thus, each QE transaction increases Bank of Japans asset holding, as well as the aggregate size of depository institutions current accounts.

Both are seen in the following chart.

,The below data shows Bank of Japans avg.

current account balances (in 100 million yen), this is represented as the blue line above (source: BOJ):,This is a sign that Japans banks (including foreign banks operating in Japan) have been parking funds at the central bank to collect minimal interest, and that practice will begin to incur costs in the future following BOJs January announcement of a three-tier interest rate regime (negative interest rate will target current account balance in excess of the amount between Jan 2015 to Dec 2015 and macro add-on balance - basically banks will have to pay surcharges for reserves accumulated under further QE purchases):,(1) Basic Balance: a positive interest rate of 0.

1 percent will be appliednWith regard to the outstanding balance of current account at the Bank that each financial institution accumulated under QQE, the Bank will continue to apply the same interest rate as before.

The average outstanding balance of current account, which each financial institution held during benchmark reserve maintenance periods from January 2015 to December 2015, corresponds to the existing balance and will be regarded as the basic balance to which a positive interest rate of 0.

1 percent will be applied.

,(2) Macro Add-on Balance: a zero interest rate will be applied to the sum of the following amounts outstanding,The amount outstanding of the required reserves held by financial institutions subject to the Reserve Requirement System,The amount outstanding of the Banks provision of credit through the Loan Support Program and the Funds-Supplying Operation to Support Financial Institutions in Disaster Areas affected by the Great East Japan Earthquake for financial institutions that are using these programs) The balance calculated as a certain ratio of the amount outstanding of its basic balance in (1) (macro add-on).

The calculation will be made at an appropriate timing, taking account of the fact that the outstanding balances of current accounts at the Bank will increase on an aggregate basis as the asset purchases progress under QQE with a Negative Interest Rate.

,(3) Policy-Rate Balance: a negative interest rate of minus 0.

1 percent will be applied to the outstanding balance of each financial institutions current account at the Bank in excess of the amounts outstanding of (1) and (2) combined,In summary, much of the QE-generated new bank reserves were held at Bank of Japan as excess reserves.

Had these cash been used to flood the real economy (such as funding government projects or monetize Ministry of Finance obligations), then hyperinflation wouldve been a likely outcome.