Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

Japan's central bank raised interest rates last week for the first time in 17 years, ending the

world's only remaining negative interest rate regime. The Bank of Japan also abandoned

its yield curve control policy, which has been in place since 2016, which saw it buying Japanese

government bonds to keep longer-term interest rates from rising. It has, however, maintained bond

buying at the same pace for now. If Japanese

rates were to continue to rise, it could have global repercussions, as the yen stability

and low interest rates have given it a role in international finance that might be about

to change. Negative interest rates are when central banks require their counterparties to pay to store

their excess cash at the institution.

Following a 7-2 vote last week, it was announced that the central bank would guide Japan's

overnight interest rate to a range of about 0 to 0.1%.

Obviously, this is not a huge rate hike. The prior benchmark rate had been minus 0.1%.

It may be more important symbolically than anything else.

Japan has a long history of central banking innovations,

or unconventional monetary policies, which were introduced after the Japanese asset price

bubble burst in the 1990s. While Japan was not the first country to introduce negative

interest rates, that honour goes to Sweden, it was the first country to introduce negative interest rates, that honour goes to Sweden,

it was the first country to introduce zero interest rates in 1999.

The Bank of Japan also pioneered asset purchase programmes known as quantitative easing,

along with the yield curve control policy, both of which became widely

used by central banks around the world in the wake of the global financial crisis. The Bank

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