The Bank of Japan outlined measures Tuesday to make it easier for commercial banks to provide loans for environment- and energy-related businesses as part of efforts to reinforce the economy’s growth and overcome deflation, sources said.
The BOJ plans to present the measures at its regular two-day policy meeting starting Thursday and work out the details as early as June, when the government compiles its growth strategy, the sources said.
The proposed lending plan would have the central bank extend collateralized low-cost loans to private-sector banks for more than six months, they said. The loans would carry a 0.1 percent interest rate per annum, which is equal to the BOJ’s key policy rate.
It is envisioned that the commercial banks will use the funds to provide loans in business areas expected to support economic growth, including research and development promoting technological innovation, the sources said.
The BOJ plans to introduce the loan program as a temporary measure. It is likely to expire after commercial banks start to proactively provide loans to business fields that help reinforce economic growth, according to the sources.
BOJ Gov. Masaaki Shirakawa instructed BOJ executives to consider compiling such measures at the bank’s Policy Board meeting in late April.
In putting together the measures, the BOJ is using as a reference its temporary lending program implemented in 1998 and 1999 amid a banking system crisis.
In the latest loan program, the challenge for the BOJ will be to decide ways to select specific growth areas as well as whether the measures will actually prompt commercial banks to boost loans to such fields.