Japan's cash balance hits new high as BOJ pumps out money to combat pandemic

Jun 03, 2020 | News On Japan

Jun 03, 2020 (Japan Times) - The balance of money circulating in Japanâ€™s economy reached Â¥543 trillion in May, hitting a record high for the second straight month, as the central bank pumped more cash to cushion the blow to businesses and consumers from the coronavirus pandemic.

Armed with a raft of loan programs aimed at prodding commercial banks to boost lending to cash-strapped firms, the Bank of Japan is expected to keep expanding its balance sheet to ease the fallout from the health crisis, analysts say.

â€œJapanâ€™s economy will probably be in crisis-mode at least for the rest of this year. It would be very hard for the BOJ to slow the pace of money printing,â€ said Mari Iwashita, chief market economist at Daiwa Securities.

The balance of monetary base, or the amount of cash in circulation and deposits at the BOJ, stood at Â¥543.4 trillion ($5 trillion) at the end of May, up 2.7 percent from the previous month, central bank data showed on Tuesday.

As part of monetary easing steps taken in April, the BOJ expanded a loan plan created in March and pledged to pay financial institutions a 0.1 percent interest for borrowing money and lending it out to companies. The move led to a surge in the number of regional banks participating in the program.

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