Japan | BoJ introduces new scheme to address climate change

Beyond leaving monetary policy settings unchanged at meeting on 18th June, the Bank of Japan also extended the deadline of its funding-for-lending scheme targeted at the victims of pandemic to March 2022 from September 2021. With additional incentives from the tweaked reserve-tiering system, the scheme will encourage banks to support firms’ balance-sheet adjustment in coming years.

What you will learn:

• Surprisingly, the BoJ also announced its plan to start a new funding-for-lending scheme to address climate change before the end of this year. 
  
• Since strengthening incentives for funding-for-lending schemes at the March meeting, the BoJ had hinted it would expand the scope of the schemes to address various structural challenges including climate change.
• With little room left for a rate cut and less appetite for asset purchases, the BoJ can still add to its easing efforts, even with limited impact.