The Bank of Japan (BoJ), the Japanese central bank, promised on Monday to buy as much government paper as needed. The central bank will also buy more corporate bonds. In this way, BoJ wants to stimulate the Japanese economy, which has been hit hard by the corona crisis.
The central bank will, among other things, scrap the limit for the purchase of government bonds, which stood at 80 trillion yen (about 690 billion euros) per year. For example, BoJ can buy unlimited government bonds. The central bank also doubled the maximum amount of corporate debt that the bank can bear.
“The spread of the coronavirus, both here and abroad, is hitting the Japanese economy hard,” said BoJ chairman Haruhiko Kuroda after the announcement.
Earlier this month, the central bank wrote this year predicting a 5 percent contraction for the Japanese economy. “The economy will be hit hard in the near future,” he added on Monday.
Due to the ongoing corona crisis, Japanese Prime Minister Shinzo Abe declared a state of emergency in the country last week. As a result, many shops, cafes and restaurants still closed. Major events were also canceled or postponed and teleworking was encouraged.
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