Staff of Reuters 2 minutes ReadFILE PHOTO: A guy wearing a protective mask passes past the Bank of Japan headquarters in Tokyo, Japan, on May 22, 2020, during the coronavirus illness (COVID-19) outbreak. REUTERS/File Photo/Kim Kyung-Hoon TOKYO, Japan (Reuters) – According to individuals familiar with Japan’s thinking, the central bank would likely offer zero-interest long-term funds to commercial lenders who provide loans or investments for climate-change-related operations. The concept will be included in an overview due out next week that lays out the basics of the Bank of Japan’s new green finance credit system. The BOJ would join a growing number of central banks in stepping up efforts to address the economic consequences of climate change. The BOJ would grant longer-than-usual zero-interest loans under the idea, according to five individuals who spoke on the condition of anonymity owing to the sensitivity of the topic. The discussions are still preliminary and subject to change, according to the sources, because the BOJ has yet to reach an agreement on the terms of the funding. However, due to a lack of clarity over which loans are labeled “green,” many regulators are leery of introducing extra incentives, such as paying interest to banks that use the plan. As a result, rather than paying the 0.1 percent or 0.2 percent interest it offers banks under existing loan programmes, such as the one for pandemic-affected enterprises, the BOJ may elect to make longer-term loans. The BOJ will settle on an outline of its plan at its next policy meeting on July 15-16, with the first batch of loans expected to be distributed by the end of the year. Leika Kihara and Takahiko Wada contributed reporting, while Sam Holmes edited the piece./n
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