NAGOYA – BOJ Gov. Masaru Hayami told a news conference here Friday that monetary conditions have eased sufficiently and he sees no need to inject additional liquidity into the banking system.
“There is no need to increase fund provisions any further,” Hayami said, commenting on the advisability of providing additional credit easing measures in response to stock market plunges.
The central bank chief said Japanese banks are unlikely to be thrown into crisis even with the domestic stock market falling to recent lows.
“The BOJ will maintain its bold, easy policy and continue to provide support on the monetary front to ensure an economic recovery will be firmly in place,” Hayami told a meeting of local business leaders in Nagoya earlier in the day. However, he stopped short of saying if he thought additional measures were needed.
The Japanese economy has almost stopped deteriorating, mostly thanks to an economic recovery abroad that began in early spring, he said, adding that domestic demand nevertheless remains weak.
“Given that adjustment pressures from excess labor and excess liabilities are still strong, it will take more time for the Japanese economy to achieve a self-sustaining recovery,” he said.
But there are growing uncertainties over the world economy, he said, singling out the U.S. economy and its effect on the financial and capital markets in Japan and abroad.
Largely reiterating comments made in a speech a day earlier in Osaka, Hayami said Japanese banks risk acquiring fresh nonperforming loans, given recent economic developments and ongoing economic structural reforms.
“I think risks for banks of acquiring new bad loans are not small for the time being due to recent economic developments, structural changes and intensifying competition among corporations,” he said.
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