Haruhiko Kuroda, governor of Bank of Japan on Wednesday said, he “cannot accept” central bank’s ultra-loose monetary policy has led to regional lenders’ deteriorating health.
“It’s true Japan’s low interest rate environment has had an impact on regional lenders through various channels,” Kuroda told parliament.
“But Japan’s economy has expanded moderately thanks in part to the BOJ’s aggressive monetary easing” and helped boost growth in areas the regional banks operate, he said.
Prime Minister Fumio Kishida in the same parliament session said, mergers and consolidation among regional lenders are among one of various options.
“But what’s important is that any decision the lenders make would help regional economies,” he said.
“Regional lenders play a very important role in their communities, including by supporting regional businesses. We need to keep that in mind in guiding policy,” Kishida said.
The BOJ came under pressure from some lawmakers due to long ultra-easy policy leading to rising costs and diminishing return which did not add up to inflation to its target level of 2% and slimmed margin of commercial banks from lending.