Bank of Japan announces unlimited purchase of government bonds

US, WASHINGTON (ORDO NEWS) — As part of the fight against the economic crisis caused by the coronavirus pandemic, the Bank of Japan announced an unlimited purchase of government bonds, as well as an increase in the repurchase of corporate debt and easier financing for banks, according to the Financial Times.

The publication notes that new decisions were made during the last one-day meeting of the BoJ board of directors. However, as the newspaper emphasizes, the redemption of government bonds can still be limited due to the regulator’s desire to maintain the yield of 10-year bonds at a target level of “about zero”. But the redemption of corporate bonds can have a much greater effect. According to FT, the Japanese regulator intends to quadruple the volume to 20 trillion yen ($ 186 billion) by September this year.

In addition, the Bank of Japan intends to simplify and reduce the cost of borrowing for commercial banks. The regulator intends to expand the range of acceptable collateral for Central Bank loans to include private debt in general, including household debt. In addition, it is planned to expand the circle of acceptable counterparties by including small cooperatives, while in some cases it is planned to use a positive rate of 0.1% instead of a negative rate of -0.1%.

“The Japanese economy is in an increasingly difficult situation due to the impact of the new coronavirus pandemic,” the Bank of Japan said in a statement. “Financial conditions have worsened in terms of corporate financing, as can be seen from the worsening position of companies.”


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