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Bank of Japan board member Seiji Adachi has emphasised the need for the BOJ to extend lending facilities, as he is worried over continued corporate financing in the face-to-face services sector which has been hit by the pandemic lockdowns.

"The issue with corporate financing is shifting from liquidity to solvency. Accordingly, the funding needs of some firms have begun to shift from borrowing to securing capital funds," Adachi told business leaders in Shizuoka City in an online conference on Wednesday.

"These developments suggest that the environment surrounding the Special Program is changing. At the same time, it is difficult to envisage a clear recovery in face-to-face services consumption until herd immunity is achieved through widespread vaccinations," Adachi said.

"Thus, as long as COVID-19 cases resurge repeatedly, we cannot rule out the possibility of firms having funding difficulties."

The BOJ board is expected to decide to extend the facility as early as the June 17-18 meeting, after the government extended no interest rate and no collateral facilities until the end of this year.