Modernizing Japanese Savings Accounts

Japan in many ways has been an effcient modern economy since World War II and earlier. But the postal system's monopoly on financial and insurance services endures, especially in rural communities. If you can imagine local post offices across the country handling 20% of all personal savings in old fashioned passbook savings accounts, you have an inkling of the amount of capital managed by Japan Post. Yesterday, the lower house of Parliament narrowly approved a measure to privatize the postal system:

The legislation calls for dividing state-run Japan Post into separate businesses for mail delivery, banking services and insurance starting in 2007. A fourth company would handle employee salaries and manage post office properties. All four companies would be grouped under a holding company at first, but the umbrella organization would then sell its shares in the banking and insurance enterprises by 2017.

The postal system's insurance and savings accounts pay low interest, even by Japanese standards. Prime Minister Junichiro Koizumi hopes to unlock the capital within Japan Post:

Japan's sprawling postal service controls 330 trillion yen ($3 trillion) in savings accounts and insurance deposits in a nation of the world's biggest savers.