Chino, Japan, May 14, 2020—Japan’s benchmark M2 plus CD money supply rose 3.7 percent in real terms on month to 1,064 trillion yen, the highest since November 2017 when it grew 4.0 percent, the Bank of Japan, the central bank, reported May 14. The sharp rise, which came after months of lethargic growth barely above 2.0 percent, was an immediate effect of fresh commercial bank lending to coronavirus-distressed borrowers urged by the Japanese government, a bank spokesman told The Prospect.
In March, M2 was up 3.3 percent.Year-on-year, M2 rose a seasonally adjusted 9.3 percent, after rising 5.9 percent in March.
The broad liquidity, which calculates almost all monetary instruments, rose 2.7 percent on month, unchanged from March’s level.
April’s outstanding bank loans were up 3.0 percent on year, rising from a 2.0 percent increase in March, the central bank reported May 13. The Japanese government asked commercial banks in March to keep lending to corona virus-affected borrowers, including outstanding and new loan. Over the coming months, the government is readying to give $900 cash payments to all Japanese citizens while extending government loans totaling some 25 trillion yen. This is expected to be reflected in money data.
The central bank also said it would buy CDs, ETFs, and other monetary instruments from financial institutions to pump liquidity into the banking system to make sure businesses remain afloat during the coronavirus crisis.
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