Transforming a well-established carbon-dependent growth model into a decarbonized one is a challenge that requires a concerted effort, and the Bank of Japan will play its part, Gov. Haruhiko Kuroda said Wednesday.
In a speech during a virtual meeting of Japanese and U.S. business leaders, Kuroda stressed the need to act now rather than later as climate change may have an “extremely large” impact on the economy.
“Considering that this carbon-dependent growth model was established over the past three centuries, transforming the model into a decarbonized one in less than three decades is a challenging task,” Kuroda said of the goal to achieve carbon neutrality by 2050.
For the business communities of the United States and Japan to work hand in hand is “more important than ever,” the governor said.
Kuroda’s remarks came as business leaders from both nations began a two-day meeting to discuss issues ranging from achieving decarbonization and bolstering supply-chains to coping with the coronavirus pandemic.
“Now is the time for us to commit to achieving a strong recovery from the pandemic and to build more resilient, inclusive and sustainable economic and social systems,” said Nobuyuki Hirano, chairman of the Japan-U.S. Business Council, which organized the event.
The BOJ plans to launch a program in December to provide zero-interest funds to financial institutions for their loans and investments to address climate change.
Kuroda acknowledged that central banks are taking different approaches to climate change.
The European Central Bank and the Bank of England are to give preferences to green assets for purchases and collateral while the U.S. Federal Reserve is seen as cautious about incorporating climate change into its monetary policy.
“The most important point is we have to start now,” Kuroda said in a question and answer session, adding that the BOJ will make adjustments to its program if needed.
“This is a very urgent task for not just the government but also central banks and financial institutions,” he said.
Besides climate change, the pandemic has become what Kuroda described as a “shock” to the economy. Supply chain disruptions and shortages of semiconductors and other parts are among the problems caused by COVID-19.
U.S. Commerce Secretary Gina Raimondo told the online meeting that the two nations are stepping up cooperation in key areas such as semiconductors, 5G and batteries.
“COVID-19 caused bottlenecks across many of our critical industries, underscoring the importance of working together to ensure our supply chain can withstand future disruptions to the economy,” she said.
“Strengthening our supply chains helps ensure we are not reliant on countries who don’t share our values,” the commerce secretary said, in an implicit reference to China.
Competition for technological superiority and greater economic influence has been heating up between the United States and China. Against this backdrop, Japan is seeking to deepen cooperation with its closest ally, the United States, in making supply chains for critical products more robust.
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