Calls from Bank of Japan Policy Board members for the central bank to make additional efforts to support corporate financing were more apparent than at the Oct. 28 meeting, according to the minutes of the meeting released Wednesday.
On Nov. 13, the board decided to assist company fundraising by further utilizing its commercial paper purchase operations and adding corporate bonds to the list of permissible collateral in the future.
The board also agreed to offer low-cost loans, carrying an annual interest rate of 0.5 percent, to financial institutions that have increased their lending to companies. The plans were further specified last week — the first loans will be disbursed Dec. 21, followed by additional loans Jan. 20, Feb. 22 and March 23. The credit line system will expire April 15, the BOJ said.
According to the Oct. 28 minutes, most of the nine board members agreed that the nation’s financial situation was quite severe and that virtually all steps possible had already been taken by the BOJ.
Under that situation, the members agreed to watch the effect of its monetary policy easing Sept. 9, which slashed the unsecured overnight call money rate to around 0.25 percent while maintaining the official discount rate at 0.5 percent, the minutes show.
Nonetheless, some members underlined the need for the BOJ to take additional measures to help relieve companies’ fundraising problems toward the end of fiscal 1998, which ends March 31.
Among them, board member Nobuyuki Nakahara, former president of oil refiner Tonen Corp., proposed that the board spell out such steps in its decision, according to the minutes.
Most others, however, said changing the decision’s wording is unnecessary, since the BOJ was already utilizing its commercial paper purchases and providing the market with more liquidity.
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