Bank of Japan Governor Haruhiko Kuroda said on Tuesday that the coronavirus pandemic would cause massive damage to the global economy and shake Japan’s banking industry. On Monday, the Bank of Japan expanded its stimulus program to curb the negative impact.
As of today, the country’s banking sector is stable, Kuroda
said. Lenders have enough capital buffers to offset the potential damage caused
by the pandemic. However, the central bank will work with the Financial
Services Agency (FSA) – Japan’s main banking regulator – to prevent major risks
related to the financial crisis.
Kuroda told
parliament:
“The global economy is worsening sharply as the virus spreads across the world. If it takes longer than expected to contain the virus at home and abroad, that could hurt the economy and push up credit costs for financial institutions.”
On April 27, the central bank said it would increase purchases
of corporate and government bonds in an effort to stimulate the economy. The Bank
of Japan is following other major central banks that took unprecedented
measures to address the looming crisis.
The Japanese economy has already shown the first signs of a
recession. Exports have been dragged down by tumbling auto shipments to the US
and the European Union. Elsewhere, corporate profits and household demand
dropped to multi-year lows.