Something fascinating has just happened in Japan.
As you (should) know, the ECB is very keen to have banks cut costs and engage in M&A.
This is officially to reduce systemic risk & more probably because it's crucial to be able to keep monetary policy as it is w/o killing banks.

Now back to Japan. The BoJ just announced a super generous facility paying +0.1% (OMG a positive rate!!!! They still remember what they look like?) on excess reserves for 3 years !! A gift from heaven !

But there are strings attached! Banks have to cut cost/income ratios (up to -4% in Y3) or engage in M&A.

This is an entirely new carrot strategy for the BoJ ! Very intrusive but also probably more effective than the soft power approach being used so far...

Let's see if it works... but that would be an interesting approach in Europe too !

@Isabel_Schnabel

And this confirms my.long held view that the BOJ might not be the biggest CB but it's leading the pack in terms of innovation and trends