Japan's government is weighing fresh moves to keep the country from sliding deeper into recession.
The Sankei Shimbunreported today that the government and central bank are hoping to launch a €78 billion scheme by the end of March to buy bad loans and other financial assets from banks using public money to ease the corporate credit crunch.
The move would theoretically free up banks to lend more money to companies which are struggling to raise funds through more traditional means such as selling bonds or new shares.
But banks worldwide are growing more reluctant to lend as they brace for a slew of bad loans as economies sour.
Analysts also doubted whether any such plan would be as effective today as in the late 1990s, when Japanese banks were saddled with a much bigger pile of bad loans.
The global crisis has shut many firms out of credit markets and slashed their earnings, forcing companies to postpone expansions, reduce production and cut staff, further undermining economic growth and impeding recovery.
Reuters