The Bank of Japan's climate change operation conducted on the 17th saw usage reach 13.9812 trillion yen, the highest since the first operation in December 2021. Usage has surged since the middle of last year, and with this increase, annual fund supply has swelled to around 25 trillion yen. The appeal lies in the ability to raise one-year funds at a low rate of 1%, the same level as the policy rate, and regional banks in particular are increasingly using it as a means to diversify funding in preparation for rising loan-to-deposit ratios and future difficulties in attracting deposits. The BOJ is taking a wait-and-see stance, noting that climate-related lending and investment results are steadily growing, but some voices are calling for verification of the contradiction of large-scale fund supply during a monetary normalization phase and whether the effects align with the program's original purpose.
Bank of JapanBOJ's climate operation usage hits record, but BOJ takes wait-and-see stance; mixed implications for policy normalization.