The Bank of Japan is acting to calm Japan's jittery financial markets. It will buy more stocks from Japanese banks to help strengthen the banking system in the face of increasing uncertainty due to the war in Iraq and the sluggish domestic economy.
Japan's banks own huge stock portfolios, and the declining value of their holdings threatens to hurt the banking sector, which also is burdened by massive bad loans. The Japanese stock market has recently fallen to 20-year lows.
Toshihiko Fukui, the new central bank governor, said the BOJ will raise its purchases of shares held by banks to $25 billion from $16 billion, building on a strategy that was unveiled last year. Mr. Fukui told reporters that he needs to clean up the bank's shareholdings to avoid financial uncertainty. He adds that the base of the Japanese economy is fragile, and he wants to ease concerns.
Some economists have expressed disappointment in the move, calling it a "Band-Aid." But others say it is evidence of a new spirit of cooperation between the independent central bank and the Japanese government.
There is more confirmation of Japan's fragile economic state: land prices fell for the 12th straight year in 2002. The drop brings average commercial real estate prices near the level of the late-1970s.
Commercial land prices across Japan dropped an average of eight percent last year from the previous year, and residential real estate prices fell an average of five percent. The government says there is no sign of a turnaround, thanks to a glut of new buildings and declining demand.
Japan's real estate industry has been struggling since the early 1990s, when inflated land and stock prices buckled, marking an end to what is widely known as the "bubble economy." The fall in property prices has left thousands of property investors nearly bankrupt.
Japan's leading mobile telephone company has developed a wristwatch phone. NTT DoCoMo says it plans to start selling the device in April, but orders can only be placed on the Internet.
Users wear them like regular wristwatches, but the watches will open into phone handsets at the press of a button. The company plans to sell the new phones for about $300 each.