BOJ can’t promote ‘green’ activities without govt strategy

The Bank of Japan (BOJ) won’t be able to promote “green” activities in a major way without the Japanese government coming up with credible strategies to achieve the net zero target, former BOJ policy board member Sayuri Shirai said.

Lending to banks alone will not be enough to promote green activity, even if the maturity of these loans can be renewed unlimitedly, Shirai told the Reuters Global Markets Forum (GMF) on Monday.

“Banks are not green and will take time,” said Shirai, now a professor at Keio University.

Japan’s corporate bond market as a whole is small, Shirai said, and until the “government clarifies the definition of green activities and greater disclosure”, the green bond market will remain insignificant.

Former Reserve Bank of India governor Raghuram Rajan told GMF last week the onus of promoting sustainable investments should lie with governments and not central banks.

Shirai agreed with Rajan’s view.

“The government should be the first. The central bank is supporter,” she said.