ID :
187056
Tue, 06/07/2011 - 19:05
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Shortlink :
https://oananews.org//node/187056
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BOJ eyeing upgrading loan program to stimulate growth
TOKYO, June 7 Kyodo - The Bank of Japan will consider at its next policy meeting expanding one of its emergency loan programs to boost the country's economy amid the negative impact of the earthquake and tsunami in March, sources close to the matter said Tuesday.
The central bank's Policy Board, which will meet for two days through June 14, is expected to study whether it could expand the 3 trillion yen program designed to encourage commercial lenders to offer cheap loans to selected industrial sectors that the BOJ considers as having growth potential, such as energy, the environment and health care.
With the possible upgrading, the BOJ could additionally supply 1 trillion to 2 trillion yen to financial institutions, the sources said. The bank could also consider making some adjustment to the scheme and apply it to reconstruction work following the March 11 disaster, which crippled businesses in northeastern Japan.
The BOJ said Tuesday its governor, Masaaki Shirakawa, will visit Fukushima, Miyagi and Iwate prefectures on Wednesday and Thursday to assess the impact on local economies of the natural disaster.
This will be Shirakawa's first visit to the affected areas and may fuel speculation the central bank could further ease monetary conditions to financially support local lenders, which will play pivotal roles in rebuilding efforts.
Under the current program, introduced in June 2010 and effective until next June, the BOJ lends to financial institutions at a razor-thin interest rate of 0.1 percent for up to four years. It has already extended a total of some 2.9 trillion yen.
There are negative views, however, about expanding the program without sufficiently reviewing it. These views generally reflect concerns that if the central bank extends loans at low interest rates it would force commercial banks to cut the lending costs of their own loans and consequently weaken their financial standings.
The central bank's Policy Board, which will meet for two days through June 14, is expected to study whether it could expand the 3 trillion yen program designed to encourage commercial lenders to offer cheap loans to selected industrial sectors that the BOJ considers as having growth potential, such as energy, the environment and health care.
With the possible upgrading, the BOJ could additionally supply 1 trillion to 2 trillion yen to financial institutions, the sources said. The bank could also consider making some adjustment to the scheme and apply it to reconstruction work following the March 11 disaster, which crippled businesses in northeastern Japan.
The BOJ said Tuesday its governor, Masaaki Shirakawa, will visit Fukushima, Miyagi and Iwate prefectures on Wednesday and Thursday to assess the impact on local economies of the natural disaster.
This will be Shirakawa's first visit to the affected areas and may fuel speculation the central bank could further ease monetary conditions to financially support local lenders, which will play pivotal roles in rebuilding efforts.
Under the current program, introduced in June 2010 and effective until next June, the BOJ lends to financial institutions at a razor-thin interest rate of 0.1 percent for up to four years. It has already extended a total of some 2.9 trillion yen.
There are negative views, however, about expanding the program without sufficiently reviewing it. These views generally reflect concerns that if the central bank extends loans at low interest rates it would force commercial banks to cut the lending costs of their own loans and consequently weaken their financial standings.
