RTTNews - Bank of Japan Governor Masaaki Shirakawa said it would be important to have an appropriate built-in exit mechanism from the extraordinary measures, once market functioning recovers.
According to the text of his August 8 speech released on Wednesday, Shirakawa said the exit-mechanism reduces investors' higher reliance on unorthodox measures.
Moreover, he said, extraordinary measures are only justified when markets, if left untouched, deteriorate, resulting weakening of the financial conditions and cause serious damage to the economy.
Since December last year, when the key interest rate was cut to 0.1%, the Bank of Japan has been buying corporate debt from lenders and offering them unlimited loans backed by collateral to keep the smooth flow of funds to companies amid the worst financial crisis.
In July, the central bank's board members decided to extend the programmes till the end of this year, saying that funding conditions are still tight.
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