QuestionWhat are the Climate Response Financing Operations?

In order to support private financial institutions' various efforts in fields related to climate change, the Bank introduced the Climate Response Financing Operations in September 2021 as a temporary measure, through which it provides funds to financial institutions for investment or loans that they make to address climate change issues based on their own decisions.

Climate change issues could exert an extremely large impact on developments in economic activity and prices as well as financial conditions from a medium- to long-term perspective. The Bank considers that supporting the private sector's efforts on the issues from a central bank's standpoint will contribute to stabilizing the macroeconomy in the long run. In taking actions from the monetary policy side, the Bank deems it important to give consideration to market neutrality.

From this point of view, the Bank designed the Climate Response Financing Operations as follows.

The Climate Response Financing Operations provide funds to financial institutions that disclose a certain level of information on their efforts to address climate change against investment or loans that are part of these efforts and contribute to Japan's actions to address climate change. The Bank, while indicating a list of broad types of investment and loans against which it will provide funds, leaves concrete decisions to financial institutions. In doing so, it requires them to disclose certain criteria with which they determine which investment or loans can be used for the operations, so as to ensure that discipline will be exercised.

The duration of loans provided through the Climate Response Financing Operations is one year. However, rollovers can be made until the end of fiscal 2030 under certain conditions, and thereby the Bank provides long-term support for financial institutions' efforts.