ID :
24592
Wed, 10/15/2008 - 16:40
Auther :
Shortlink :
https://oananews.org//node/24592
The shortlink copeid
BOJ steps up battle against liquidity problems in financial market+
TOKYO, Oct. 14 Kyodo - The Bank of Japan stepped up its battle against liquidity problems in the global financial market Tuesday, unveiling a set of policy tools that include the expansion of its dollar-fund lending operation in a coordinated action with other central banks.
The BOJ Policy Board agreed in its emergency meeting that the Japanese central
bank will join three European central banks to offer unlimited dollar funds to
financial institutions. The Bank of England, the European Central Bank and the
Swiss National Bank announced the measure Monday.
In its statement, the BOJ said that in its new operations, ''Funds are provided
at a fixed rate set for each operation for unlimited amount against pooled
collateral.''
BOJ Governor Masaaki Shirakawa told reporters that the global financial turmoil
''has been affecting money markets in our country.'' But he said Japan's
financial sector remains relatively stable and that the BOJ sees no immediate
need to guarantee all bank deposits or debts.
The BOJ chief also reiterated that monetary policy should be determined by each
central bank depending on each country's economic condition, suggesting that
the BOJ is unlikely to cut interest rates in the near future.
The BOJ's seven-member decision-making body also voted unanimously to keep its
key short-term interest rate unchanged at 0.5 percent.
Among other measures adopted by the board to calm nerves in short-term
borrowing markets are boosting liquidity in government bond repurchasing or
''repo'' markets and facilitating corporate financing through the issuance of
commercial papers.
The BOJ separately said it will temporarily suspend from Wednesday selling
stocks it holds, given the recent turbulence in equity markets.
The U.S. Federal Reserve said in a statement Monday that it will increase the
sizes of its temporary currency swap lines with the three European central
banks ''to accommodate whatever quantity of U.S. dollar funding is demanded.''
Following upheavals involving U.S. and European financial institutions since
last month, the BOJ has injected ample liquidity into money markets, where the
cost charged by banks lending to each other rose sharply as trust between
counterparties has evaporated amid the financial storm.
In September, the BOJ entered into a $60 billion money swap deal with the
Federal Reserve Bank of New York so it can lend dollar funds via auctions to
banks and other financial institutions operating in Japan in its first
dollar-supply operation. The value of the swap deal was increased later to $120
billion.
The BOJ Policy Board agreed in its emergency meeting that the Japanese central
bank will join three European central banks to offer unlimited dollar funds to
financial institutions. The Bank of England, the European Central Bank and the
Swiss National Bank announced the measure Monday.
In its statement, the BOJ said that in its new operations, ''Funds are provided
at a fixed rate set for each operation for unlimited amount against pooled
collateral.''
BOJ Governor Masaaki Shirakawa told reporters that the global financial turmoil
''has been affecting money markets in our country.'' But he said Japan's
financial sector remains relatively stable and that the BOJ sees no immediate
need to guarantee all bank deposits or debts.
The BOJ chief also reiterated that monetary policy should be determined by each
central bank depending on each country's economic condition, suggesting that
the BOJ is unlikely to cut interest rates in the near future.
The BOJ's seven-member decision-making body also voted unanimously to keep its
key short-term interest rate unchanged at 0.5 percent.
Among other measures adopted by the board to calm nerves in short-term
borrowing markets are boosting liquidity in government bond repurchasing or
''repo'' markets and facilitating corporate financing through the issuance of
commercial papers.
The BOJ separately said it will temporarily suspend from Wednesday selling
stocks it holds, given the recent turbulence in equity markets.
The U.S. Federal Reserve said in a statement Monday that it will increase the
sizes of its temporary currency swap lines with the three European central
banks ''to accommodate whatever quantity of U.S. dollar funding is demanded.''
Following upheavals involving U.S. and European financial institutions since
last month, the BOJ has injected ample liquidity into money markets, where the
cost charged by banks lending to each other rose sharply as trust between
counterparties has evaporated amid the financial storm.
In September, the BOJ entered into a $60 billion money swap deal with the
Federal Reserve Bank of New York so it can lend dollar funds via auctions to
banks and other financial institutions operating in Japan in its first
dollar-supply operation. The value of the swap deal was increased later to $120
billion.
