The Bank of Japan is considering purchasing subordinated debt issued by banks to help bolster their capital, the Nikkei business daily said on Monday, in a move to contain the fallout from the global financial crisis.
Such steps would come at a time when countries around the globe are striving to shore up banks' capital and limit the impact of toxic assets, in hopes of stemming the financial crisis that has engulfed economies worldwide.
The Nikkei, citing unidentified senior BOJ officials, said the central bank has already begun compiling measures to support banks' capital and might work on details within the month.
The BOJ is considering underwriting subordinated loans and bonds for banks, the Nikkei said, adding that such a move would be highly unusual for a central bank and would likely require government guarantees to make it feasible.
A spokesman at the BOJ declined to confirm the report and said the central bank was not considering any specific course of action.
Japanese banking shares climbed after their U.S. peers rallied last week, with Japan's banking sub-index climbing 6 percent, outperforming the benchmark Nikkei 225 Average [NIKKEI 7715.52 146.2402 (+1.93%) ], which rose 2.3 percent. more...
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