BOJ bank loan schemes said to encourage the transmission of QE to the economy

Reuters with a sources story saying that the BOJ will again extend the deadline for special loan schemes for Japanese banks

  • BOJ board will make decision at Jan 22-23rd meeting
  • Move may help ease market jitters, triggered by a cut in the BOJ’s bond purchases on Tuesday
  • BOJ has two cheap loan schemes for financial institutions
  • One targeting boosting bank lending to industries with growth potential, another which offers four-year loans at zero interest for banks that increase overall lending
  • BOJ will extend the March 2018 deadline for these programmes given solid demand from financial institutions
  • BOJ exempts funds procured from the schemes from a 0.1 percent negative interest it charges to excess reserves

These programmes have been extended several times and their continuation shows that lending to the economy is continuing. It’s pretty similar to the BOE’s funding for lending scheme. Financial funding in Japan rose 2.5% y/y in Jan driven by property investment and M&A demand.

Ryan Littlestone

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Ryan Littlestone

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