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Tokyo, May 22 (IANS) The Bank of Japan (BoJ) on Friday announced a new loan scheme worth 30 trillion yen ($278 billion) to provide liquidity to companies in the face of the difficulties caused by the coronavirus pandemic.
The initiative was approved by the monetary policy board of the Japanese central bank during a Friday emergency meeting, which focused on discussing additional actions to support the private sector in the face of the impact of COVID-19 and measures to contain its spread, reports Efe news.
The low-interest lending scheme for mainly small and medium-sized enterprises will remain in force until March 2021, financed by a fund guaranteed by the BoJ and managed by commercial banks, and follows other measures to support individuals and businesses already adopted by the authorities of the world's third-largest economy.
The BoJ also decided to leave its monetary policy unchanged after easing its policy at its previous meeting at the end of April with the aim of cushioning the impact of the economic crisis caused by the pandemic.
The new lending program is intended to "further support financing mainly of small and medium-sized firms, with a view to addressing the spread of the novel coronavirus", the Japanese central bank said in a statement released at the end of its meeting.
Under the scheme, the central bank will lend interest free to commercial banks for one year so that they in turn offer loans to companies and for which the BoJ will the pay the banks 0.1 per cent interest.
The loans will be backed by a government guarantee program framed within its comprehensive economic stimulus plan and are aimed at meeting the growing liquidity needs of businesses that are most vulnerable to falling demand or disruption of their activities due to the pandemic.
The services and retail sectors are among the worst hit in Japan, where authorities have recommended the temporary closure of many non-essential businesses since early April with the aim of curbing the spread of the novel coronavirus.
Along with the credit scheme, the BoJ will continue its programs of unlimited purchases of government bonds as well as of corporate bonds, also aimed at sustaining liquidity for the private sector and providing stability to the markets.
The central bank also left unchanged the short-term benchmark interest rate target of -0.1 per cent, which it has applied since 2016 for deposits of financial institutions in the bank, as well as its target to keep the 10-year government bond yields at around 0 per cent.
--IANS
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