Japanese bank loans fall 1.7 pct on year in March

15:20, April 12, 2011      

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The level of outstanding loans held by Japanese banks fell 1.7 percent in March from a year earlier, making the 16th consecutive month of decline, the Bank of Japan ( BOJ) said Tuesday.

According to the central bank, last month's quake and tsunami contributed to an already jittery and deflationary climate of slumping demand for short-term loans.

The BOJ's figures revealed that loans held by the country's four main categories of banks, including "shinkin" or credit unions, stood at about 456.33 trillion yen (5.39 trillion U.S. dollars), in the recording period.

The central bank also said that with the exception of loan write-offs, the overall loan balance dropped 1.8 percent from the same month year earlier.

The BOJ revealed Tuesday that its 9-member policy board felt that post-quake, private sector reconstruction could support the nation's economic revival although a number of factors remained unknown.

"With regard to the effect of the earthquake in the medium term, some members said that although public and private sector reconstruction activities could boost the economy, the scale and timing were highly uncertain," the latest BOJ minutes showed.

The minutes also showed that a government representative called on the BOJ to respond boldly and in a timely manner to future changes in economic and financial conditions.

At the meeting, two days after the Great Tohoku Earthquake, the BOJ loosened policy by doubling its asset-purchase program to 10 trillion yen (118 billion U.S. dollars) and immediately after the March 11 quake, the BOJ attempted to stabilize the financial markets through massive fund injections into the money market.

The BOJ conducted same-day settlement operations for six straight days until March 22 from March 14, offering to inject a total of 40 trillion yen (472.48 billion U.S. dollars) and encouraging financial institutions in then worst affected areas to lend to each other as restoration and reconstruction projects swung into gear.

Separately, Japan's central bank said on Tuesday that the value of M2 money stock and CDs collected an annual 2.7 percent on year in March to 786.6 trillion yen (9.29 trillion U.S. dollars).

The figure beat economists' expectations for a 2.5 percent increase and the March's rise follows a 2.4 percent annual expansion in February.

The balance of M2 includes currency in circulation and deposits, but excludes those held at Japan Post Bank.

M3 money stock was up 2.0 percent on year to 1,086.5 trillion yen (12.83 trillion U.S. dollars), the central bank also said, again toping median economists' forecasts for a 1.9 percent increase and following an annual 1.8 percent expansion in the previous month.

The balance of M3 includes currency in circulation, deposit money and so-called "quasi" money and CDs.

Japan's money supply or money stock, refers to the total amount of money available in the nation's economy at a particular point in time and is usually defined as currency in circulation and demand deposits, which are depositors' easily-accessed assets on the books of financial institutions.

Leading economists are quick to note that there is a direct relation in Japan between long-term price inflation and money- supply growth, at least for rapid increases in the amount of money in the economy.

Source: Xinhua
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