MNI BRIEF: New Facility Won’t Hinder Policy: BOJ Adachi

The new deposit facility to help strengthen regional banks put in place this Tuesday will not undermine controllability of policy nor have side-effects, Bank of Japan board member Seiji Adachi said Thursday. The decision will increase incentives for regional banks facing deteriorating business conditions to improve their operations and to consider consolidation, particularly as their credit costs will likely rise further, depending on businesses, store closers and bankruptcies, he said.

Adachi noted that financial markets had reactively positive to the results of the U.S. presidential election but the outlook remained uncertain amid heightened uncertainties.

Answering questions after a speech to business leader, Adachi said a worsening of the labor market conditions caused by coronavirus seems to be marking time, but store closures are increasing, which would likely accelerate job losses, particularly if the rate of infections increases further, which will worsen consumer sentiment and restrict spending.