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Free AccessMNI POLICY: BOJ Friday Extra-Meet May Launch Lending Tool
--No other policy outcomes, economic outlooks expected at May 22 meet
By Hiroshi Inoue
TOKYO (MNI) - The Bank of Japan confirmed Tuesday it will hold an
additional policy meeting this Friday, likely to announce a new lending facility
for smaller companies, with wider discussion of monetary policy and the economic
outlook left until the mid-June meeting, which itself could be cut back to a
single day gathering, depending on coronavirus developments, MNI understands.
BOJ Governor Haruhiko Kuroda has said already that the BOJ wants to release
the new scheme, which could also be used to get funds to sole traders, as
swiftly as possible before the regular policy meeting, and the added gathering
is planned to do just that.
-ACT AS NEEDED
History has shown that the BOJ will meet to decide and announce
extraordinary measures beyond normal policy, including when the bank announced
the temporary U.S. dollar liquidity swap facility back in May 2010. In December
2008, the BOJ met discuss and introduce monetary market operations to facilitate
corporate financing.
At both meetings, the BOJ left monetary policy unchanged and didn't offer
any economic assessment.
Officials have been working out the fine details of the new lending
facility, including whether or not to set an upper limit, to lower the
loan-to-value ratio or to include bridge financing underpinned by the Financial
Services Agency.
The FSA has been urging financial institutions to support smaller firms
through bridge financing to get over administrative issues and the BOJ is now
considering bringing that scheme into the new facility.
--DETAILS
Bank officials are surveying commercial banks to examine how often they
will be able to report eligible loans to the BOJ and how they processed
application for new loans.
The BOJ is considering how often the bank extends the loans, such as based
on the balance of end-month.
The BOJ has already said that the interest rate on loans under the new
scheme will be zero percent, saying it will pay 0.1% interest to banks' on the
balance of all loans extended to companies, which it hopes will ease rising
credit costs.
The scale of no interest rate and no collateral loans by the government to
support smaller firms is JPY23 trillion, which will be a guide for the BOJ in
considering the size of the facility.
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: MMJBJ$,M$A$$$,M$J$$$,MT$$$$]
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.