TOKYO, July 8 (Reuters) – Japan’s central bank is likely to offer long-term interest-free funds to commercial lenders who provide loans or investments for activities aimed at combating climate change, sources close to its said. reflection.
The plan will be part of a preview scheduled for next week that sets out details of the Bank of Japan’s new lending program, which is designed to encourage green finance. The move would bring the BOJ into line with a growing number of central banks stepping up their efforts to deal with the economic fallout from climate change. Read more
Under the proposal, the BOJ would offer longer-than-usual loans that span multiple years without interest, five sources said on condition of anonymity due to the sensitivity of the matter.
Discussions are still preliminary and subject to change as there is no consensus within the BOJ yet on the terms of the funding, the sources said.
However, the sources said many policymakers are reluctant to add more incentives, such as paying interest to banks that use the program, due to a lack of clarity on which loans are considered “green”. .
As such, the BOJ may choose to provide longer-term loans rather than paying the 0.1% or 0.2% interest it offers to banks under existing loan programs, such as one intended for companies affected by the pandemic.
The BOJ will decide on the broad lines of its program at its next political meeting on July 15 and 16 and aims to deploy the first batch of loans by the end of this year.
Reporting by Leika Kihara and Takahiko Wada; Editing by Sam Holmes
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