The Bank of Japan will introduce new emergency measures to help struggling firms borrow money amid a recession in Asia’s largest economy, media reports said yesterday.
The Bank of Japan (BoJ) will hold an extraordinary meeting as early as this week to adopt the steps, public broadcaster NHK and other local media said, without naming their sources.
The BoJ announced similar measures to help companies in November 1998 when Japan was hit by a credit squeeze after a number of banks collapsed under mountains of bad debts.
Companies are again facing difficulty in raising funds, with the world’s second-largest economy officially in recession and banks becoming reluctant to lend. Demand for corporate bonds is also low amid the financial turmoil.
The BoJ will reportedly discuss measures to provide financial institutions with funds to facilitate lending to companies as borrowing needs rise towards the end of the fiscal year to March 31.
Among the measures, the BoJ may accept corporate bonds with lower-than-usual credit ratings as collateral for lending to commercial banks, the reports said.
The funds would be for up to April to tide companies over until the end of the fiscal year, they said.
The central bank declined to confirm the reports.
“Nothing has been decided on whether the Bank will take the same measures as the ones taken in 1998,” a BoJ spokesman said.