Bank of Japan offer Zero interest loans for green projects

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On Friday (July 16), Japan’s central bank joined the fight against climate change by giving zero-interest funding to banks that lend to sustainable projects or invest in green bonds.
Climate change poses a danger to economic development and financial stability, according to the new plan which will be implemented later this year and will last at least until March 2031.
The funding will be available for a year, with unlimited rollovers allowed until the programme expires. The strategy aligns the Bank of Japan (BOJ) with the European Central Bank and the Bank of England in their resolve to address the problem through monetary policy.
Nonetheless, the notion of central banks tackling climate change remains novel across the world. Central banks are market-neutral organisations that are not intended to favour any business or sector.
The Federal Reserve of the United States is said to have objected to the proposal, claiming that such decisions should be left to elected authorities.
“Aside from what governments and parliaments do, we pondered what central banks can do on this front,” BOJ Governor Haruhiko Kuroda said at a news conference on Friday, addressing the disparity in views. The most pressing question was how much we should and can do as a central bank.”
“Primarily, central banks are responsible for pricing and financial stability,” he continued. However, we are aware that climate change will have a significant long-term impact on the economy and financial system.”
The action by the BOJ is a big step forward for Japan, which has long been seen as a laggard in this field owing to its reliance on coal and plastic. It aligns the central bank with Prime Minister Yoshihide Suga’s clean energy drive, which has vowed to cut emissions by at least 46% from 2013 levels by 2030, on the way to carbon neutrality by 2050.

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