The Bank of Japan will consider climate change in its monetary policy discussions, Governor Haruhiko Kuroda said on Thursday.
“We have a great interest” in climate change, and its impact on the economy and the financial system, Kuroda said in an interview. “Naturally, how we respond to this at the level of monetary policy will become a topic of discussion.”
The comments come amid growing debate among central bankers over whether or how they should support efforts to counter climate change, following a series of pledges by governments, including the US, China and Japan, to reduce greenhouse emissions.
Photo: Bloomberg
Touching on another key theme among investors, Kuroda said that global inflation concerns were most relevant in the US.
US Federal Reserve Chair Jerome Powell has said that some temporary inflation pressures will prove transitory and stimulus should stay in place for longer.
“That policy stance is based on the recognition that it will take time to overcome low inflation once it is entrenched,” Kuroda said. “That is the lesson learned from Japan’s experience of prolonged deflation.”
Until now, Kuroda has largely stuck to the view that the Bank of Japan needs to consider climate change from the perspective of how it might present a risk to the financial system, a stance similar to Powell’s.
While his latest remarks suggest he might be moving in the direction of European Central Bank President Christine Lagarde or Bank of England Governor Andrew Bailey, who have shown a more aggressive stance on green issues, it remains to be seen what action the Bank of Japan will take.
“While there are discussions about whether central banks should be buying green bonds, many of those discussions are over asset management, not monetary policy,” Kuroda said, when asked whether Japan’s central bank would consider purchasing green bonds as a response to climate change.
Targeting green bonds is an approach Lagarde has had difficulty moving forward. Kuroda did not rule out using new loan incentives that the bank launched in March.
Kuroda, Powell, Bailey and Lagarde are to be among those discussing ways to promote green financing measures at next week’s Green Swan Conference organized by the Bank for International Settlements, the IMF and others.
Interest is growing in how the Bank of Japan might support the nation’s pledge last month to reduce emissions by 46 percent by 2030 on its way to becoming carbon neutral by 2050.
Eighty-three percent of economists surveyed by Bloomberg last month said that the Bank of Japan will end up using its new lending incentives to promote environmental, social and corporate governance, or higher growth policies.
The incentives essentially pay commercial banks different interest rates on their reserves depending on the type of lending they provide for businesses.
The incentives were intended to give the bank more scope for lowering its policy rate, not as a possible tool for responding to climate change, Kuroda said.
However, they could be adapted, he said.
As for inflation and signs that the tide of central banks is starting to signal a move away from the emergency policy measures of the COVID-19 pandemic, Kuroda once again underlined that the Bank of Japan would keep its stimulus rolling.
“Each central bank has to adapt its monetary policy to its own economy, price and financial situations,” Kuroda said. “Our inflation rate is still quite low and so we have to be persistent in conducting our monetary easing to achieve our 2 percent price stability target.”
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his