Japanese Government Wants To Purchase 2 Trillion Yen Aid Business

According to Japan's Kyodo news agency, the Japanese government decided on the 12 day that it would make use of the "crisis response assistance business" of the government's financial institutions, the Japanese policy and financial treasury, to purchase CP issued by enterprises to help enterprises to make working capital.

It is estimated that the purchase amount will be 2 trillion yen (about 150 billion yuan), which will be included in the supplementary economic strategy announced on the same day.

The government hopes to help the enterprises to solve the financial difficulties to boost the economy.

The Federal Reserve has already set up a new direct purchase system for commercial paper to help enterprise turnover in the crisis.

The Bank of Japan has indirectly implemented aid through financial institutions. But as the demand for capital increases at the end of the year, the original practice is far from perfect.

Commercial paper is an unsecured contract negotiable instrument which directly raises short-term funds from the market.

According to the plan, financial institutions such as the Japanese policy investment bank will use the Treasury Fund to purchase commercial paper directly.

The government will also consider providing guarantees for commercial paper purchased by policy investment banks in order to prevent the financial situation of the institution from deteriorating.

In this global financial crisis, even large enterprises are hard to obtain sufficient funds through commercial paper and corporate bonds, and banks tend to be reluctant to lend money. Therefore, the Japanese government considers it necessary to provide further support.

Yang Jing: editor in charge