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March 1, 2002
Bank of Japan, in Shift, Agrees to Loosen Credit
"Under intense political pressure, the Bank of Japan moved to further loosen its monetary policy today, agreeing to buy more government bonds and ease restrictions on borrowing. ... the government's latest plan for the economy ... included tougher bank inspections, incentives for writing off nonperforming loans and easier credit for small companies."
"The bank said today that it would begin buying 1 trillion yen ($7.5 billion) in long-term government bonds every month, an increase of 25 percent. It also removed ceilings on the length of time that companies will have to borrow directly from the central bank to cover cash flow problems as the fiscal year draws to an end on March 31."
"Though it gave in to the government's wishes, the bank's policy board tried to head off any erosion of its credibility by stressing in its announcement that for its actions to do any good, they must be accompanied by additional steps to clean up the banking sector. ... neither the central bank nor the government appeared ready to take the kinds of aggressive steps urged by investors, by the Bush administration and by others to deal with the banking problems and revive the economy. ... 'The Bank of Japan and government continue to take small, gradual steps and won't act aggressively until push comes to shove'"
"The interest-rate premium demanded by investors who buy Japanese bank bonds has doubled in recent weeks ... " ... [more]
12:34:23 PM 
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