BOJ's new lending scheme may be several tril. yen in scope: sources+

TOKYO, June 2 Kyodo -
The Bank of Japan is considering extending a total of several trillion yen in
loans to financial institutions under a new lending program it is thinking of
introducing, possibly in July, to help the nation overcome deflation and ensure
a sustainable economic recovery, sources close to the matter said Wednesday.
The BOJ is expected to decide on the scope of the loans and other details of
the program at a meeting of its Policy Board on June 14-15, the sources said.
Through the new measure, the BOJ aims to support the government's long-term
growth strategy through 2020 to be compiled by the end of this month.
BOJ Governor Masaaki Shirakawa and other policymakers decided at their previous
policy meeting in May that the BOJ would extend loans to commercial banks for
basically one year at an interest rate of around 0.1 percent, the same as the
BOJ's key policy rate, with the aim of encouraging banks to lend more to
businesses in growth areas.
Through the new lending measure, the BOJ intends to strengthen the foundation
of Japan's economic growth as it regards bold fund provisioning for growing
industries such as businesses linked to energy and environmental conservation
as necessary to achieving a full-fledged economic recovery.
The BOJ is expected to accept applications for the loan program from financial
institutions for about a year and it is likely to enable the loans to be rolled
over, the sources said.
Shirakawa has said that by making the loan program a temporary measure, the BOJ
wants financial institutions to utilize the scheme ''as intensively as possible
while it is in place.''
As for the selection of business areas eligible for loans under the new
program, the central bank plans to respect the private-sector banks' approach
to lending while focusing on businesses that the government and business
federations' regard as promising industries, the sources said.
In its growth strategy, the government is expected to aim for the creation of a
new market covering not only energy and the environment but also medical
treatment, nursing care and robots as well as other areas of advanced
technology, and call for cooperation between the public and private sectors to
achieve the target.
According to the basic policy for the growth strategy announced late last year,
the government envisions annual real economic growth of 2 percent on average
and the creation of 4.76 million jobs.
The National Policy Unit has been working in cooperation with other ministries
on specific measures for the realization of such growth.
The BOJ has been concerned about a fall in the medium- to long-term potential
growth rate of Japan's economy due partly to the shrinking of the population
and sluggish productivity.
Through the new funding measure, the BOJ aims to help cultivate new demand so
as to solidify the base of the nation's economic growth.
==Kyodo
2010-06-03 00:01:58