An article in the Wall Street Journal reporting further on Kuroda’s speech on Sunday.
Kuroda said that unlike in the late 1990s, when Japanese banks were saddled with mountains of nonperforming loans, banks now have the capital to expand lending and are resilient to external shocks, such as a rise in interest rates
- recent reports show banks have increased lending for activities related to M&A, real-estate and natural-resources transactions,
- But, loans to smaller companies have remained “sluggish.”
From the aricle:
The BOJ regards a shift in funds by financial institutions from safe government bonds to riskier assets, such as stocks and foreign assets, as one of the mechanisms it wanted to put in motion with its unprecedented monetary easing undertaken in April. The strategy also includes getting banks to initiate more lending,
Such a shift, called a “portfolio rebalancing effect,” is one of the three things the BOJ hopes to bring about, the others being putting broad downward pressure on bond yields and achieving a rise in inflation expectations toward a 2% rate of inflation in two years.
BOJ’s Kuroda Calls on Banks to Ramp Up Lending (The Wall Street Journal is often gated, so if you’re unable to access the article try a search of Google news using the headline)
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USD/JPY is around 101.10/15 after having traded higher in early New Zealand.
