Climate response loans capped at 50 trillion yen under amended terms
The Bank of Japan amended the terms of its climate-response fund-supplying operations, capping total loans at 50 trillion yen and setting a 10 trillion yen per-institution limit. The Policy Board adopted the operational changes during its meeting on September 17 and 18, 2026.
New ceilings and floating rate benchmarks
Under the amended climate-response framework, total outstanding disbursements cannot exceed 50 trillion yen, with borrowing capped at 10 trillion yen per eligible counterparty.
Counterparty borrowing limits correspond to the outstanding amount of climate-related investments or loans with a remaining maturity of at least one year.
The Bank of Japan also updated the loan rate calculation across several market operations, shifting the benchmark from the complementary deposit facility rate at disbursement to the average rate prevailing during the loan extension period.
Special rules for financial cooperative central organizations now calculate borrowing maximums based on the aggregate qualifying loans of member institutions, subject to the overall 10 trillion yen ceiling.
Flexibility for disaster financing
The central bank also restructured its disaster-area lending program.
The framework removes the dedicated 1 trillion yen quota for the Great East Japan Earthquake, transitioning to a model where the Policy Board determines credit limits at monetary policy meetings for each declared disaster.
This disaster quota modification takes effect on May 31, 2027, while interest rate formula updates apply immediately.
Similar average-rate calculation options were added to funds-supplying operations against pooled collateral, ensuring consistency across market operations.
Prudent limits on special lending
Tying borrowing costs to average deposit rates removes unintended subsidies from rate changes during the loan term.
The 50 trillion yen ceiling prudently prevents unchecked balance sheet expansion for targeted lending.
These overdue adjustments successfully modernize central bank facilities without disrupting ongoing green finance flows.