The Bank of Japan may hold an emergency meeting before a scheduled rate review in June to set up a reward plan for financial institutions that boost lending to small firms hit by the coronavirus, Gov. Haruhiko Kuroda said Thursday.

Japan’s $1.1 trillion stimulus package has cheap loans on offer for firms hit by a virus-related slump in sales, and Kuroda has ordered staff to prepare a plan spurring financial institutions to boost lending to such firms.

“We’d like to proceed with an eye on getting the plan ready before the next meeting in June,” Kuroda told the Diet, adding that the BOJ needed to work out details with government agencies, but wanted to create the plan as soon as possible.

“We’ll aim to get the plan rolling quickly, even if that means holding an emergency policy meeting.”

The BOJ holds eight scheduled rate reviews each year with the next one set for June 15 to 16. It is rare for the central bank to hold an unscheduled meeting, which only happens when imminent changes in the economy demand a quick policy response.

Kuroda said collateral in the form of individual household loans could be difficult for the BOJ to accept when extending cheap loans to financial institutions.

“But we’re expanding the range of private debt we accept as collateral, so that households as well as small and midsize firms can reap the benefits,” he added.

The BOJ expanded monetary stimulus Monday to combat the widening fallout of the pandemic, which has sent the economy to the brink of deep recession by forcing families to stay home and businesses to shut down.

Most BOJ measures so far target large companies that can readily borrow from banks or tap credit markets, creating a challenge for policymakers to reach out to smaller businesses that could go under without immediate funding support.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.