$98b stimulus mulled if Brexit weighs down Japan
TOKYO (The Japan News/ANN) - Japan's finance ministry, the Financial Services Agency and the Bank of Japan have agreed that the authorities will cooperate to prevent disarray in worldwide financial markets and any resulting deterioration of the Japanese economy.
The government will consider implementing at least 10 trillion yen (US$98 billion) of economic stimulus measures, which will be presented in autumn, if the Japanese economy is negatively impacted by the victory of those who voted for Britain’s exit from the European Union in Britain’s national referendum.
In the wake of the result of the British referendum, the finance ministry, the Financial Services Agency and the Bank of Japan held an urgent meeting at the Finance Ministry on Saturday.
They agreed that the authorities will cooperate to prevent disarray in worldwide financial markets and any resulting deterioration of the Japanese economy.
If the current trends of falling stock prices and the yen’s appreciation continue for an extended period, the government will consider increasing the scale of the economic stimulus measures.
The Bank of Japan may also hold an extraordinary monetary policy meeting to consider additional monetary-easing measures.
After the urgent meeting in the Finance Ministry, Masatsugu Asakawa, vice minister of finance for international affairs, told reporters, “After analysing the situations in the London and New York markets, we’ve shared views in preparations for the coming week.”
Masayoshi Amamiya, an executive director of the Bank of Japan, said, “Because we share concerns about possible risks, we will consider the necessary actions according to our respective roles.”
In financial markets worldwide on Friday, stock prices fell simultaneously. At the New York Stock Exchange, the Dow Jones industrial average experienced a drop of more than 600 points.
Immediately after the July 10 House of Councillors election ends, the government aims to begin full-fledged discussions about the details of economic stimulus measures.
The government is planning measures to stimulate consumer spending, such as the provision of shopping coupons, as pillars of the economic stimulus package.
The government will also expand the scale of measures to cope with the problems of children on waiting lists for day care centres by, for example, raising the salaries of the staff.
The government will fully utilise its loans and investments via government-affiliated financial institutions to provide funds to private companies for infrastructure projects.
A senior official of an economy-related government authority had predicted that the scale of economic stimulus measures would exceed 5 trillion yen.
If the scale of economic stimulus measures surpasses 10 trillion yen, it will be the first time since January 2013, just after the inauguration of the second Cabinet of Prime Minister Shinzo Abe. At that time, the government decided to implement 10.3 trillion yen in economic stimulus measures.
US$1 = 102.10 yen as of 6/27/2016 via oanda.com