Bank of Japan to fund small businesses fighting pandemic

TOKYO (AP) – Japan’s central bank said yesterday it will provide some JPY30 trillion (USD280 billion) to banks for financing small and medium-size businesses battling economic hardships brought on by the coronavrius pandemic.

The Bank of Japan (BoJ) will start providing funding to the banks in June, it said. The offer for zero-interest and unsecured loans comes on top of earlier measures, such as JPY20 trillion (USD187 billion) for purchasing corporate bonds and commercial papers.

The BoJ has also announced JPY25 trillion (USD234 billion) financing for private debt.

The world’s third-largest economy has sunk into recession, battling stagnant consumption, dwindled tourism and plunging exports.

Central banks around the world, including the United States (US) Federal Reserve, have been making similar moves. The BoJ’s policy board decided unanimously to continue all measures through March next year.

The bank has sought to send a message of financial stability by lifting the ceiling on the purchase of government bonds to maintain financial fluidity.

The central bank said it will continue to monitor the coronavirus situation and carry out additional measures, if needed.

“There is little doubt that the BoJ will maintain an unequivocally dovish stance,” said Hayaki Narita of Mizuho Bank.

Narita said Japan is facing “a triple whammy of negative demand shock”, on top of the outbreak, the postponement of the 2020 Tokyo Olympics until next year, a recent tax raise and trade tensions between the US and China, Japan’s main trading partners.

Japanese Finance Minister Taro Aso (L) meets with Bank of Japan Governor Haruhiko Kuroda in Tokyo. PHOTO: AFP