|Change of interest rate decision rule
Deposits or insurances etc. are contracted with plan of future interest
rate in financial institution, but it is theoretically impossible.
Basic interest rate changes with scale of economy change. In short, future interest rate can’t be decided in advance. To decide interest rate in advance is too risky for both financial institution and contractor.
Controversy of cutting guaranteed yields of life insurance is a result
of increase of contract without understanding of essence of interest rate.
Guaranteed yields of insurance just after bubble economy has been over
6 %. In this case, it was natural for insurance company to lose money without
economic growth rate about 6% in Japan every year. As contract balance
has been increased without understanding of essence of interest rate, management
of insurance company has been deteriorated.
Therefore, interest rate should be changeable with economic situation (minus may be used.). Financial institution should contract on condition of it. By system improvement like this, stable management can be continued.