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BOJ's Kuroda spotlights climate change as key theme to guide policy

by Reuters
Friday, 5 March 2021 09:55 GMT

* Climate change has ties to BOJ's mandate -Kuroda

* BOJ must deepen understanding of climate change risks -Kuroda

* Kuroda cautious about BOJ targeting green bonds in asset buying

* Comments underscore BOJ's growing focus on climate change (Recasts)

By Leika Kihara

TOKYO, March 5 (Reuters) - Bank of Japan Governor Haruhiko Kuroda highlighted climate change on Friday as one of the key themes in guiding monetary policy, but kept his distance from the idea of the central bank buying green bonds.

The comments underscore the bank's growing focus on climate change, a key topic of debate among central banks, some of which are stepping up purchases of green bonds used to finance clean energy and environmental projects or are considering doing so.

The Bank of Japan must speed up research and deepen debate with other central banks on how climate change affects monetary policy and what risks it poses on financial institutions, Kuroda told parliament.

"Climate change is among crucial factors affecting the economy and financial system," he said. "In that context, there are ties to the central bank's mandate."

Christine Lagarde, president of the European Central Bank, has backed "green" debt in corporate bond-buying schemes, while Britain's finance minister has said the country will expand the Bank of England's remit to include environmental sustainability.

Kuroda said it was possible for the BOJ to buy green bonds, as long as they met the set requirements of an existing corporate bond-buying programme.

But there were "many issues" that need to be cleared for the BOJ to target green bonds, he said, such as how doing so would clash with the bank's principle of buying assets in a manner neutral to markets.

The BOJ will host a global workshop on March 25 and 26 to scrutinise how climate change risks could affect the banking system. (Reporting by Leika Kihara; Editing by Chris Gallagher and Clarence Fernandez)

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