Japan: The BoJ pumps more money into the market
April 7, 2011
At its 7 April meeting, the Bank of Japan (BoJ) unveiled the framework for the Funds-Supplying Operation to Support Financial Institutions in Disaster Areas, after the finance minister urged the BoJ to enhance its supportive monetary policy stance in the zones hit by the earthquake. The BoJ will provide JPY 1 trillion (USD 12 billion) of long-term funds to financial institutions in the devastated areas, in order to ensure sufficient funds are available for restoration and rebuilding efforts. In addition, the BoJ will also broaden the range of eligible collateral for money market operations. Since the earthquake on 11 March, the Central Bank has provided ample funds to meet demand in the money market, injecting more than JPY 5 trillion (USD 60 billion) through its Asset Purchase Program. In a separate move, the BoJ downgraded its economic assessment for the first time since October, as the earthquake has sharply dampened production in some areas by damaging production facilities, disrupting the supply chain, and constraining electric power supply, however the economy is expected to return to a moderate recovery path in the near future.