BOJ’s Lending Under Virus Program Triples After April Tweaks

(Bloomberg) -- Bank of Japan lending under its virus funding program tripled after it essentially offered to pay interest on the loans at its April meeting, the latest results show.

The outstanding amount of loans under the program jumped to 12.7 trillion yen ($119 billion), the central bank said Thursday.

The increased demand illustrates the impact of the BOJ’s decision to indirectly pay interest on the loans and to open them up to a wider range of financial institutions.

Rather than charge a negative rate of interest on the loans, a move that could have generated criticism from customers paying interest to commercial banks, the central bank instead said it would pay 0.1% interest on reserves at the BOJ that correspond to extra lending stemming from the program’s loans.

Governor Haruhiko Kuroda reiterated his pledge Thursday to do whatever the BOJ can to support the economy. He said he would introduce another new lending program for small companies and could unveil details via an emergency meeting before the next scheduled gathering in June.

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