MNI BRIEF: BOJ's Climate Operations Are "Effective" - Amamiya

Bank of Japan Deputy Governor Masayoshi Amamiya said on Sunday that the BOJ’s Climate Response Financing Operations are the most effective way to provide financial support not only to large corporations but also to small and medium-sized enterprises in their efforts to achieve net zero.

Since financial intermediation in Japan is mainly based on indirect financing, the operations, “which provide funding for investments and loans that contribute to decarbonization via banks can be regarded as the most effective way to provide financial support not only to large corporations but also to small and medium-sized enterprises in their efforts to achieve net zero,” Amamiya said at the 2022 Autumn Annual Meeting of the Japan Society of Monetary Economics.

“Climate change may have an extremely large impact on the economy, prices, and financial conditions over the medium to long term,” he warned.

“Therefore, from the standpoint of central banks, which are responsible for price stability and the stability of the financial system, supporting the private sector's response to climate change will contribute to macroeconomic stability in the long run,” he said.

“Central banks' actions affect society and the economy in many ways. The key principle in this regard is that the central bank should work on the macroeconomy as a whole while intervening as little as possible in the microeconomic allocation of resources.”