The Bank of Japan said Tuesday it will expand the range of eligible collateral that lenders can put up for BOJ loans in an effort to help financial institutions obtain ample liquidity.

Wrapping up its two-day Policy Board meeting, the BOJ also said the key interest rate would remain at 0.1 percent.

“Financial conditions have remained tight on the whole, despite improvements in issuing conditions for commercial paper and corporate bonds,” the central bank said in a statement.

Economic conditions have also deteriorated significantly, the BOJ noted. “Today’s decision to expand the range of eligible collateral was made with a view to ensuring stability in financial markets,” it said.

The BOJ said it will expand the range of eligible collateral for loans on deeds to the government and those with government guarantees.

It will also accept loans on deeds to municipal governments as eligible collateral.

Economists had mixed views on the latest decision.

It is clear the BOJ is trying to avoid leaving the impression that it is doing nothing and has no countermeasures against the economic downturn, said Hideo Kumano, chief economist at Dai-ichi Life Research Institute, adding that the central bank is only pursuing marginal policy measures.

Monetary measures the BOJ has taken to prop up the economy include slashing the key interest rate, resuming its purchases of stocks held by banks and facilitating corporate financing.

Hiromichi Shirakawa, chief economist at Credit Suisse, said the latest measure will only help banks’ financing, instead of actively facilitating corporate financing.

To help companies finance themselves, Shirakawa suggested the BOJ should ease the conditions of its corporate bond purchases.

Although the BOJ now has fewer options available to attempt an economic recovery, Shirakawa suggested it could lower its benchmark rate to zero, or implement measures to keep the yen weak against the dollar.

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