Bank of Japan To Extend Special Loans to Nudge Banks to Lend

The Bank of Japan is likely to extend three special loan facilities that have provided more than $81 billion in lending over the past three years to try to nudge Japan’s risk-averse banks to create more credit, sources said.

An extension would signal the BOJ’s commitment to driving funds through the banking sector to borrowers, even as it continues its unprecedented quantitative easing policy under Governor Haruhiko Kuroda to try to revive an economy that has suffered years of low-grade deflation and sluggish growth.

The central bank’s policy board is expected to review the loan programs in November or December before their expiry date of March 2014. Apart from extending them by at least a year, the board might also combine the programs to simplify their operations, people familiar with the matter said.

via Reuters

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