Note 3-56

56 Local governments have reportedly deposited some ¥20 trillion in public funds at financial institutions. The payoff system will subject local governments' public deposits at financial institutions to limited protection. Deposits in excess of ¥10 million plus interest at a bank will not be protected when the bank fails. In future, therefore, local governments are expected to select financial institutions more strictly and shift bank deposits to investment in government and other safer bonds (a March 2001 report by a task force for research on local governments' response to the introduction of the payoff scheme, at the Ministry of Public Management, Home Affairs, Posts and Telecommunications).