The Bank of Japan (BoJ) is to kick-start the development of an asset-backed securities market for small businesses to give them capital-raising alternatives to Japanese banks, whose bad-debt portfolios make them reluctant to offer new loans.
The central bank will spur the market's development by exposing its own capital to private sector credits, some of which will be rated below investment grade. At the end of July it will begin a three-year scheme of investing Y1,000bn ($8.5bn, Ђ7.3bn, Ј5.2bn) in securities linked to receivables of small- and medium-sized companies (SMEs).
The move highlights policymakers' exasperation with the Japanese banks that remain preoccupied with non-performing loans and shrinking capital bases and are therefore unwilling to expand their lending operations. This has left many SMEs starved of capital.
