The Bank of Japan said Tuesday it had not bought any shareholdings from banks by the end of February despite saying it was going to resume the purchase of bank-held stocks as part of efforts to fight the global credit crisis.
The BOJ reintroduced the emergency measure Feb. 23 to boost financial institutions’ capital, which has been hurt by plunging equity prices. The lack of purchases means financial institutions are probably hesitant to sell their impaired holdings and finalize losses before the March 31 close of the business year.
The BOJ has resumed the purchase program as a temporary measure effective through April next year and said it will buy up to ¥1 trillion worth of shares with a rating of Triple-B-minus or higher from financial institutions that hold stocks valued at more than ¥500 billion.
The step came amid concerns that banks are tightening lending due to the losses on their stock and other securities investments resulting from the global financial turmoil.
The BOJ last took the measure between November 2002 and September 2004, purchasing a combined ¥2 trillion worth of stocks from banks and other institutions.
Monetary base up
The country’s monetary base grew at its fastest pace in nearly five years in February, rising 6.4 percent from a year earlier as the Bank of Japan pumped liquidity into the financial system to counter the credit crisis, the BOJ said Tuesday.
The average daily balance of the monetary base — cash in circulation and the balance of current account deposits held by financial institutions at the central bank — rose to ¥93.65 trillion. The rise was the biggest since May 2004, when the balance grew 7.4 percent.
The BOJ has been increasingly easing credit conditions, encouraging commercial banks and other institutions to lend more to businesses amid the burgeoning credit crunch.
The balance of current account deposits, or the sum of funds those lenders can use freely, expanded 65.8 percent to ¥12.91 trillion, the biggest rise since November 2003.
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