Bank of Japan (BOJ) officials express concerns that the US government fiscal spending could impede commercial banks to raise dollar funds unless demand for the greenback spikes due to unstable financial markets, MNI reports, citing the central bank’s sources.
Key takeaways
“Commercial banks, including Japanese banks, in the US have considerable dollar funds from corporate deposits following US stimulus measures and monetary easing. “
“While higher US interest rates will raise funding costs, dollar liquidity won’t be hit, in the BOJ’s view.”
“Nevertheless, BOJ officials continue to keep a close eye on Japanese banks as the central bank considers foreign-currency funding as one of three major risks for the stability of the financial system with the other two being credit costs and losses on securities.”
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