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MNI INSIGHT: BOJ May Mull New Measures For Smaller Firms


Special BOJ measures aimed at injecting liquidity and supporting corporate finance are set to end in March 2022

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The Bank of Japan is looking at other paths to help the face-to-face services sector as it considers whether to extend special fund-provision measures set to expire in March 2022 meant to inject liquidity and support corporate financing arising from pandemic containment measures , MNI understands.

An initial step on whether to end the special measures introduced in March 2020 and extended several times with the latest in June is the December Tankan business sentiment survey on Dec. 13, followed by the Dec. 16-17 policy meeting as well as the overall progress of vaccinations and infection rates into early next year for a final decision at the Jan. 17-18 policy meeting.

The BOJ extended the special measures to March as it awaited developments among manufacturers facing supply-chain disruptions and corporates weighing capex plans against higher energy costs, see: .MNI INSIGHT: BOJ Cautious On March End Of Special Covid Funds.


The BOJ has no intention of directly supporting specific sectors or industries such as the face-to-face services sector where structural issues, such as weak sales or repayment issues, including solvency, are not part of the central bank's remit, MNI understands.

However, bank officials cannot ignore government support for smaller firms in its planned economic stimulus package as it gears up for upper house elections to parliament in July. The BOJ could introduce new measures to support smaller firms aligned with that effort that would be separate from the special measures.

Japan's Ministry of Health, Labour and Welfare in January 2022 will scale down an Employment Adjustment subsidy, set to expire at the end of March 2022, and consider whether to extend it, or not, in mid-February, which would be somewhat supportive to any BOJ decision to gradually scale down or tweak the special measures.


BOJ board members in September had mixed views on whether to end or extend the special measures, according the minutes of the policy meeting.

The central bank removed the wording "depending on the future impact of COVID-19, the bank will consider further extension of the program if necessary" in the policy June statement.

BOJ officials share the view that the special measures should be terminated if the outlook for pandemic recovery improves with further progress on vaccinations and infection rates.

But uncertainty remains about the manufacturing sector, particularly after weaker-than-expected Q3 GDP. Focus is now on Q4 or early next year for an economic recovery from pandemic conditions with sentiment on the upswing a factor.