MNI POLICY: BOJ Kuroda: Warns Prolonged Risks; Do What Needed

     TOKYO (MNI) - A prolonged coronavirus outbreak will increase the risk that

a deterioration in the real economy will affect financial market stability, Bank

of Japan governor Haruhiko Kuroda said Thursday.

     "Although this risk is judged as not significant at this point, it is

necessary to pay close attention to future developments," Kuroda told business

leaders.

     "The Bank will closely monitor the impact of Covid-19 and will not hesitate

to take additional easing measures if necessary," he added

     Other key points from Kuroda's speech:

     --"The BOJ's role is to ensure smooth financing and maintain stability in

financial markets, and to this end, it is determined to do whatever it takes as

a central bank while firmly cooperating with the government and foreign

authorities."

     --Kuroda cited expansion of quantity and operation tools and lowering

interest rates as possible future options.

     --"It is essential for the Bank to make policy responses so that downward

pressure from the financial side on the real economy will not intensify."

     --"Coupled with the government's aggressive fiscal responses including the

emergency economic measures, I expect that these monetary easing measures will

enhance the effects of so-called policy mix of monetary and fiscal policies."

     --"Credit contraction has been avoided thus far. However, financial

conditions have been less accommodative in terms of corporate financing, as seen

in a rise in the issuance rates for CP and deterioration in financial positions

of large firms as well as small and medium-sized ones due to declines in their

sales and profits."

     --"With the economy in an increasingly severe situation, the stress on the

financial system has been growing in Japan, and it is necessary to pay further

attention to the circumstances."

     --"Although tension in financial markets have abated somewhat, the markets

have remained nervous due to a decline in liquidity."

     --"Financial markets have become somewhat stable. That said, the

functioning of many markets has remained low, due in part to the impact of a

shift to split operations, and investors' risk sentiment has remained cautious.

The global financial system has been under severe stress."

     --"Downward pressure on the global economy is expected to be extremely

significant as economic activity is likely to be constrained worldwide until the

impact of the spread of COVID-19 wanes."

     --"While there are extremely high uncertainties over the outlook for

economic activity, as I will address later, the Bank assumes in the April

Outlook Report that the impact of the spread of COVID-19 will wane on a global

basis through the second half of 2020, which generally is in line with the

baseline scenario presented by the IMF."

--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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