Bank of Japan adds $183 billion to economy
TEXT OF STORY
JEREMY HOBSON: As rescue workers race to find survivors of the earthquake and tsunami that hit Japan on Friday, the country’s central bank is racing to stabilize the world’s third largest economy. It’s pumping in about $200 billion.
Let’s get more on this from the BBC’s Ben Richardson in Singapore. Good morning.
BEN RICHARDSON: Good morning Jeremy.
HOBSON: So why is Japan pumping so much money into its economy?
RICHARDSON: The simple answer to that is confidence. It’s very similar in this sort of idea as the huge fund and money that’s been committed out of Europe today. Markets are very jittery. People are concerned about liquidity, so what the central bank then does is make huge amounts of funds, some $183 billion available to all the banks and all the players in the market, and sort of say to them, “Don’t worry about things. We’re here to back you up. We’re here to provide cash if you need it. Keep lending, keep the economy ticking over,” because that — at this moment in time — is the most important thing.
HOBSON: And obviously, this is a situation that is impacting places far outside of Japan. Give us a sense of the impact on the rest of the world.
RICHARDSON: Japan is one of the world’s biggest exporters. It’s companies are some of the biggest producers in the world. Production at some of the main companies is shut down. People are trying to shift money and assets around. So really, everything is intertwined. People are watching this very closely. Within Japan, they’re saying that maybe a percentage point could be knocked off growth in the short term. Going forward, the rebuilding will obviously help the economy pick up. But really people at the moment are trying to get a sense for it. They know it’s going to be very big. They know it’s going to be a problem. And they’re trying to limit that as best they can at the moment.
HOBSON: The BBC’s Ben Richardson in Singapore. Thanks Ben.
RICHARDSON: Thanks.
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