TOKYO: Having adopted a negative interest rate on some excess reserves to penalise financial institutions for leaving money idle, the Bank of Japan (BOJ) may consider helping them lend by offering a negative rate on some loans, according to people familiar with talks.
Such a discussion could happen in conjunction with any decision to make a deeper cut to the current negative rate on reserves, said the sources, who asked not to be named. The BOJ’s Stimulating Bank Lending Facility, which now offers loans at zero per cent interest, would be the most likely vehicle for this option, they said yesterday. The officials said adding this to the central bank’s arsenal could have a positive impact on the economy, but would also raise questions about giving subsidies to commercial lenders.
