By Mayumi Otsuma
Jan. 19 (Bloomberg) -- Bank of Japan Governor Masaaki Shirakawa said a key focus for central banks during the credit crisis is to ensure that cash flows smoothly through the financial system.
“Providing liquidity appropriately is the most important task for a central bank to help stabilize financial institutions, markets and the financial system,” Shirakawa told the upper house budget committee in Tokyo today.
With Japan’s interest rates already at 0.1 percent, Shirakawa is looking for other ways to make it easier for companies to borrow and prevent the recession from deepening. The central bank decided to start buying commercial paper last month, and may consider extending purchases to longer-term corporate debt at a policy meeting this week, economists say.
Japan’s financial institutions remain healthy compared with those of U.S. and Europe, though their condition “is gradually worsening,” Shirakawa said today.
The two-day board meeting concludes on Jan. 22.
To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net
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