Japan negotiating with banks to borrow at zero rate

Japan's Ministry of Finance is negotiating with the country's major banks to lend to the government at a zero interest rate in auctions beginning in October or November, a government official familiar with the procedure said on Monday.
The government has been asking lenders about the possibility of submitting tender offers with negative rates at the ministry's short-term special accounts borrowing program auctions.
But Japan's big banks have said it would be difficult to submit tender offers with negative rates in the auctions, which prompted the government to instead ask the banks to agree to a "zero floor" on interest rates, said the official, who did not want to be identified due to the sensitivity of the issue.
The floor on the tender offer rate is now set at 0.001 percent. The government's approach to lenders comes after the Bank of Japan's aggressive monetary easing drove yields below zero for most of the Japanese government bonds traded in the market.