Japan’s Monetary Board To Meet on Monday
May 16, 2011 | Finance, Government
Bank of Japan Governor Masaaki Shirakawa said on Sunday the central bank would provide huge amounts of liquidity to the banking system, reinforcing the bank’s determination to keep markets stable in the wake of the devastating earthquake that struck northeastern Japan.
The Bank Of Japan is likely to provide Y2000bn-Y3000bn (£15.2bn-£22.8bn) in funds through its market operations Monday morning, two to three times the normal amount, to soothe markets and keep short-term borrowing costs from spiking, Reuters reported.
Economics Minister Kaoru Yosano said the government would fight decisively against speculative moves and would not tolerate short selling to take advantage of the quake. “We will monitor market conditions and plan to provide markets with a lot of liquidity first thing tomorrow morning,” Shirakawa said after attending a meeting of cabinet ministers.
The central bank’s first priority is to ensure banks in the worst-affected regions do not run out of cash by extending loans at favourable conditions. Over the weekend it provided Y55bn in funds to financial institutions in quake-struck northern Japan. The Japanese government faces an enormous challenge coming up with funds to finance the massive rescue and rebuilding efforts that will be required in the aftermath of the disaster.
Japan’s public debt is approaching 200 per cent of gross domestic product and the government has called for an increase in the consumption tax to offset falling tax revenues.
This article was written by: Dennis Micheals
