BOJ pressed to ensure flow of funds to firms

A government representative called on the Bank of Japan to ensure corporate funding at the central bank's Oct. 13-14 policy meeting, at which policymakers discussed when to end emergency funding measures, according to the meeting's minutes released Thursday.

The government expected the BOJ "to carefully examine market developments and take appropriate measures to facilitate the flow of funds to firms, because they continued to face a harsh business environment and difficulty in securing funding," Keisuke Tsumura, parliamentary secretary of the Cabinet Office, was quoted as saying.

At the policy meeting, the BOJ deferred a decision on its emergency corporate funding measures introduced earlier this year to help corporations cope with the global financial crisis.

At a subsequent policy meeting Oct. 30, the BOJ decided to let its corporate debt purchasing program expire at the end of this year as scheduled, while extending the expiration date for another support program — a temporary measure to provide banks with unlimited low-interest loans — by three months to March 31.

Tsumura, together with Parliamentary Secretary of Finance Hiroshi Ogushi, took part in the BOJ's policy meeting for the first time as representatives of Prime Minister Yukio Hatoyama's administration, which was formed in mid-September.

During the meeting, Tsumura sought opinions from BOJ policymakers about the government's handling of economic and fiscal policies, and some of the central bank policymakers said it was desirable for the government to "swiftly" present the overall picture of the policies.

They added that the new government's move to review and slash an extra budget compiled from the previous government might "adversely" affect the economy, at least in the short run.

The government officials also asked the BOJ to stay in close contact, the minutes showed.

"It is important that the bank and the government frequently exchange views regarding economic and financial developments to appropriately conduct their respective policies," Tsumura said, adding that the government acknowledges the importance of the BOJ's independence, according to the minutes.

The Democratic Party of Japan-led government is considering holding regular meetings with the Bank of Japan, state minister for economic and fiscal policy Naoto Kan said Wednesday.

"We are discussing what form an opportunity for communication between the government and the BOJ should take," Kan said at a news conference amid government expectations that the central bank will take additional steps to combat the increasing deflationary pressure.

"Meeting on a regular basis is conceivable, rather than (having contacts) in a confidential fashion," said Kan, who is also deputy prime minister and minister in charge of national strategy. "We have yet to decide the final format," such as the frequency of meetings and who would attend them.

The government hopes to hold the first such meeting by the end of this month to share views on the economy and financial markets as its opportunities for communication with the BOJ have been reduced due to the recent discontinuance of the Council on Economic and Fiscal Policy's meeting, which the BOJ governor and ministers used to attend.