The Bank of Japan unveiled a plan on Friday to boost funding for fighting climate change, in a surprise move underscoring the importance of the issue for central banks.
The BOJ also maintained its massive monetary stimulus to support the country’s economic recovery and extended a deadline for asset-buying and loan programs introduced last year to channel funds to pandemic-hit firms.
Following are excerpts from BOJ Governor Haruhiko Kuroda’s comments at his post-meeting news conference, which was conducted in Japanese, as translated by Reuters:
ON NEW CLIMATE-CHANGE SCHEME
“Japan has pledged to aim for carbon-zero by 2050. The parliament and government are primarily responsible for measures to achieve this. But climate change has a very big impact on the economy, prices and financial markets in the medium- to long-term … By creating this scheme, we can respond flexibly to changes in the external environment regarding climate change.
“The BOJ will also examine steps on climate change that are not directly related to monetary policy, and will announce the findings at an appropriate timing after our July policy meeting.”
“In Japan, bank lending makes up a large portion of companies’ fund procurement. By creating the climate change scheme, we hope financial institutions will respond to growing corporate needs for funds for this purpose.”
“The pandemic continues to severely affect Japan’s economy, and is exerting big downward pressure on service sectors. It will take some time for the economy to emerge from the pandemic, during which corporate funding will remain under stress.”
“It’s not as if we will buy green bonds in huge amounts. But we won’t rule out buying green bonds in the future.”
IMPACT OF RISING RAW MATERIAL COSTS
“Japan’s vaccine innoculation is picking up pace, so at one point, consumers may spend more on services and there could be pent-up demand … That may make it easier for companies to pass on costs. But at this point, that’s not happening easily in Japan as in Europe or in the United States. As the economy recovers steadily, we may gradually see inflation accelerate.”
(Reporting by Leika Kihara; Editing by Sherry Jacob-Phillips)