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BOJ's Shirakawa says bank can do more

Bank of Japan governor Masaaki Shirakawa said on Thursday that the bank could still do more to stabilise financial markets though its move to buy commercial paper was already helping improve CP issuance conditions.

  • Reuters
  • Published: 23:38 January 8, 2009
  • Gulf News

Tokyo: Bank of Japan (BOJ) governor Masaaki Shirakawa said on Thursday that the bank could still do more to stabilise financial markets though its move to buy commercial paper was already helping improve CP issuance conditions.

He said the central bank should consider ways to bring down interest rates on long-term corporate financing as the world's second-largest economy slips deeper into recession.

The BOJ is not alone in seeking to lower long-term interest rates to support the faltering economy. The US Federal Reserve has said it is considering purchases of longer-term Treasury debt.

Japanese companies are bracing for tighter credit conditions as the end of the business year approaches on March 31.

Shirakawa said the vicious cycle between upheaval in the financial markets and trouble in the real economy was continuing, and he reiterated that the BOJ would do its utmost to stabilise the market.

"The markets are already reacting. The environment for issuance of CP is improving somewhat after the BOJ's decision to buy CP," the BOJ chief told a lower house budget committee.

At the same committee, Prime Minister Taro Aso reiterated Japan's support for the US dollar as the key currency, explaining that a steep fall in the dollar would be a big minus for Japan.

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