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Free AccessMNI POLICY: BOJ New Lending Facility; Keeps Yield Curve Policy
TOKYO (MNI) - The Bank of Japan board kept monetary policy unchanged at
Friday's additional policy meeting, but announced the guidelines for a new
lending facility to support smaller firms' financing.
The scale of the new lending facility to support smaller firms' financing
is JPY30 trillion, the BOJ said.
"The BOJ will provide funds to eligible counterparties pooled collateral
for up to 1 year at the loan rate of zero percent with the maximum amounts
outstanding of eligible loans reported by those counterparties," the
post-meeting statement said.
Interest-free and unsecured loans will based on the government's emergency
economic measures and loans guaranteed by the credit guarantee corporations in
response to Covid-19, it added.
"Loans to small and medium-sized firms affected by Covid-19 which are
equivalent to in terms of loan conditions (the maximum amount for each eligible
counterparty: JPY100 billion)."
The BOJ has already said that the interest rate on loans under the new
scheme will be zero percent, but 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 to lenders.
The bank's fund-provisioning through the new measure will start in June,
taking into account loans made by financial institutions as of end-May.
--EXTENDED DURATION
In addition to the purchases of commercial paper and corporate bonds
(maximum amount outstanding JPY20 trillion) and the special funds-supplying
operations (JPY25 trillion), the new lending facility adds JPY30 trillion of
available funds.
The total amount of the three program is JPY75 trillion and the BOJ decided
to extend the duration of these measures by 6 months until the end of March
2021.
"By conducting these measures, the BOJ will continue to support financing
mainly of firms and to maintain stability in financial markets. On this basis,
it will closely monitor the impact of the Covid-19 for the time being and will
not hesitate to take additional easing measures if necessary," the BOJ said.
Policymakers held the extraordinary meeting to just decide on the guideline
for the new lending scheme and didn't discuss developments of economic and price
conditions, which will discussed at the regular policy meeting scheduled on June
15-16.
Governor Haruhiko Kuroda will nit hold a post-meeting press conference this
Friday.
--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$$$,M$J$$$]
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.