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BOJ looking at pumping another trillion yen in loans into banks

March 18, 2009
By Ken Worsley


Just a year ago we were hearing reports on the supposed health of Japan’s banking system. There were even members of Japan’s parliament suggesting that Japanese banks could be in position to take over US and European banks in an effort to put Japan on top (oops). While that view was mocked in some small circles, it seems to have come round to expose the Japanese banking industry as still not being on proper footing.

On Tuesday, Bank of Japan governor Masaaki Shirakawa told reporters that “coupled with the downturn in the domestic economy, a decline in the health of financial institutions could have a negative impact on financial system stability.”

No shit, Sherlock. In other words, Japanese banks have continued their record of failure in overseas markets. That’s been discussed out in the open for at least a decade.

The Bank of Japan is now looking at pumping about 1 trillion yen into the banking system as the continued decline in share values means that BOJ purchases of shares held by banks isn’t going to have much effect. Japanese banks are seeing their capital bases further erode, and this will have an effect on their ability to lend. Should the state step in to help the banks? The answer to that question depends on whether you believe in socialism or capitalism.

But what you believe in barely matters; the Bank of Japan is free to act on its own whims, even if they will have the result of doing no good for the average taxpayer.

Filed Under Bank of Japan, Banking, Finance 

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Comments

2 Responses to “BOJ looking at pumping another trillion yen in loans into banks”

  1. J on March 22nd, 2009 3:07 pm

    pump prime time baby

  2. Section D on March 22nd, 2009 8:09 pm

    There were even members of Japan’s parliament suggesting that Japanese banks could be in position to take over US and European banks in an effort to put Japan on top…

    Several of my friends, Japanese guys and gals in upper and mid-level management at a variety of companies in Tokyo, were laughing at that one as soon as it was verbalized by the media. They weren’t laughing at the state of the banking industry overseas, they were just stating the obvious about the banking industry here in Japan.

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