• Kyodo

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A number of Bank of Japan policymakers see the need for an in-depth analysis of the economic impact a newly introduced funding program will have on efforts to tackle climate change, a summary of opinions showed Wednesday.

According to the summary, which details views expressed at the July 15-16 policy meeting, one member said the BOJ’s move to offer zero-interest funds to financial institutions making loans and investments to tackle climate change was “appropriate” because it takes into account market neutrality and policy flexibility.

“With the fund-provisioning measure to support efforts on climate change, the bank will make sustained and positive efforts that can contribute to stabilizing the macroeconomy in the long run,” the member said.

The outline of the new program was announced after the two-day meeting, which also led the BOJ aligning with other central banks in Europe to give greater consideration to the global challenge of climate change when guiding policy.

BOJ Gov. Haruhiko Kuroda has said it is better to take a “learning by doing” approach rather than waiting in order to support the private sector in addressing climate change, given its “far-reaching” impact on the economy over the longer term. But he has also dismissed the idea of prioritizing purchases of green bonds issued by companies and other entities as part of the bank’s monetary easing.

Following its scheduled launch later this year, the new climate-related program is expected to run until March 2031. The government, for its part, is aiming to reduce carbon dioxide emissions to net zero by 2050, while counting on green growth spurred by investments in technology and other areas.

“In Japan the economy is largely dependent on fossil fuel, and indirect financing has a major role. If the bank directly intervenes in addressing climate change, various distortions may occur in the financial system,” one member said. “This can be avoided with the new fund-provisioning measure, which will support investment or loans that financial institutions make to address climate change based on their own decisions.”

The BOJ has left the task of deciding what is green to private-sector financial institutions.

“When addressing climate change from the monetary policy angle, it is necessary for the bank to examine — without any preconceptions — its impact on economic activity and prices by further carrying out research and study that will form the basis of policy decisions,” one member said. Another called for “in-depth analysis and research on how specifically climate change will affect the macroeconomy.”

The summary of opinions was compiled by Kuroda and does not attribute comments to individual members.

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