MNI POLICY: BOJ Kuroda: Climate Risks Eyed; Policy Mix Timely

     TOKYO (MNI) - Bank of Japan Governor Haruhiko Kuroda Thursday warned of

climate-related risks to the economy, which he sees as differing from other

issues faced by policymakers.

     "It is necessary to keep in mind to what extend industrial policies and

environmental regulations and guidelines are effective in addressing such risk,"

Kuroda told the Europlace Financial Forum in Tokyo.

     "Therefore, there may be room in this case for cooperation between the

industrial sector and the financial sector," Kuroda said.

     "Climate-related risk raises cross-sectional and time-dimensional issues.

The cross-sectional problem is that carbon emissions affect a wide range of

industries, and the time-dimensional problem is that this affect is a long-term

problem," Kuroda noted.

     In addressing environmental risks as a new issue in financial stability,

the wealth of previous discussions between financial regulators and supervision

may provide some valuable insights, Kuroda said.

     --JGB ISSUANCE

     Kuroda didn't mention monetary policy in his speech, but touched on the

outlook in a question and answer session, indicating that the BOJ will maintain

the current easy policy to prevent short- and long-term interest rates from

rising due to a possible increase in JGB issuance.

     "The government is considering compiling a supplementary budget not only to

improve social infrastructure (damaged by natural disasters) but only to

mitigate negative impact of the slowdown in overseas economies on Japan's

economy," Kuroda said.

     "The yield curve control is aimed at lowering short- and long-term interest

rates, which also strengthen the impact of fiscal policy. Fiscal policy will

increase government bond issuance and push up long-term interest rates," he

said, adding, "Policy coordination or policy mix is a standard policy to cope

with current economic conditions."

--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

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