TOKYO: The Bank of Japan on Friday introduced a new fund supply measure intended to aid the finances of small and midsize firms struggling with the fallout from the coronavirus pandemic.
Starting next month, the central bank will provide funds worth about 30 trillion yen under the new measure, bringing the total size of its corporate financing support steps to 75 trillion yen.
These measures will remain in place through the end of March next year. Existing steps include the BOJ’s expanded purchases of commercial paper and corporate bonds.
Under the new measure, the BOJ will provide zero percent loans to commercial banks that extend interest-free lending to clients under the government’s coronavirus relief package.
These banks will be given 0.1 percent interest on their current account deposits at the BOJ in proportion to amounts of interest-free loans they receive from the central bank.
The BOJ adopted the new fund supply measure by holding an extraordinary monetary policy meeting for the first time since November 2011.
In a statement, the BOJ said that it “will continue to support financing mainly of firms and to maintain stability in financial markets.”
The central bank will closely monitor the impact of the coronavirus for the time being and “will not hesitate to take additional easing measures if necessary,” it said.
The BOJ’s board voted 8-1 to kept its monetary policy unchanged. The central bank will keep the short-term policy rate at minus 0.1 percent and guide 10-year government bond yields around zero percent.