UPDATE 1-BOJ Gov: explained concern to PM on asset buying

(For more stories on the Japanese economy, click [ID:nECONJP])

* BOJ asset buying may hurt its contribution to state coffers

* Shirakawa: told by PM that govt to take necessary steps
(Adds quotes, details)

By Rie Ishiguro

TOKYO, Nov 10 (BestGrowthStock) – Bank of Japan Governor Masaaki
Shirakawa said on Wednesday he explained to Prime Minister Naoto
Kan the need for the central bank to maintain its financial
health even if losses are incurred from its new asset-buying
scheme.

Last week, the BOJ rolled out a 5 trillion yen ($61.19
billion) scheme under which it will inject funds into the economy
by buying assets ranging from government bonds to corporate debt
as well as exchange-traded funds and real estate investment
trusts. [ID:nTOE6A400Q]

While fluctuations of the risky assets could hurt the BOJ’s
balance sheet and its ability to contribute to the state coffers,
Shirakawa told reporters that Kan said the government will
consider necessary steps for when any losses are booked.

“I sought government understanding on the need for the BOJ to
maintain its financial health,” Shirakawa told reporters after
the meeting between the two.

“The government side said it would consider needed steps,” he
added, without elaborating further.

Since the BOJ’s asset buying scheme involves risky assets, it
may incur losses and may need to set aside reserves, which would
affect the bank’s contribution to the national treasury,
Shirakawa said.

Chief Cabinet Secretary Yoshito Sengoku and Finance Minister
Yoshihiko Noda also attended the meeting, which the finance
minister said was part of regular consultations.

Noda said the government took the BOJ’s explanation firmly
and would respond to it. But he said the two sides did not
discuss concrete measures.

Earlier the Nikkei business daily said the Ministry of
Finance plans to allow the BOJ to cut its contributions to the
national treasury if the bank incurs losses on its asset buying
scheme, so as to support its latest monetary easing.
[ID:nSGE6A80QK]

The Nikkei said the BOJ’s contribution to national coffers
348.7 billion yen ($4.27 billion) in 2009.
($1=81.71 Yen)
(Additional reporting by Yuko Yoshikawa; Editing by Michael
Watson)

UPDATE 1-BOJ Gov: explained concern to PM on asset buying