JCP demands BOJ withdraw plan to buy shares from banks
On September 18, the Bank of Japan announced that it will buy shares worth several trillion yen out of the over 20 trillion yen in stocks held by the nation's major banks, the aim being to help them maintain their capital bases.
The fall in share prices are causing more "unrealized losses" with the value of the banks' stock portfolios dropping below book value. The central bank's decision is aimed at making up for the major banks' losses under the pretext of the need for "maintaining a stable financial system."
Retract the plan
Japanese Communist Party Chair Shii Kazuo on September 19 called on the BOJ to retract the plan, saying tax money must not be used for rescuing banks. At a press conference in Nara City, he made the following points:
The plan is a "forbidden move" and unacceptable because major banks will be relieved at the expense of the general public. It's illegitimate to use the central bank to boost stock prices and shift the risk of stock holding by major banks onto the BOJ.
If the price of shares bought by the BOJ falls, the losses will be shifted onto the people in the form of a fall in BOJ payments to the national treasury. The BOJ's stock holdings will undermine its functions and operations as the central bank, the keeper of the national currency value. The plan will expose the BOJ to extreme risk.
The second problem is that the plan is a concrete manifestation of what Prime Minister Koizumi promised to U.S. President Bush in the Japan-U.S. summit talks in relation to speeding up write-offs of bad loans held by major banks.
This is unacceptable because it means that the government is busting small- and medium-sized business by virtually using public funds, under the heading of writing off bad loans.
The JCP demands that the BOJ cancel this policy. The BOJ, which was at first opposed to the plan, has changed its attitude to meet the U.S. request in the summit talks.
By submitting to U.S. requests in the past, the Japanese economy has been greatly distorted. The JCP warns that this time, if the policy is carried out, the consequence of the error will be irretrievable. (end)