--BOJ Hayami says ECB and BBK adopt Lombard lending facility
--Hayami says BOJ can start Lombard lending in March
--BOJ head: Adopting monetary base target quantitative easing inappropriate
--Hayami: BOJ to inject long-term funds via improved bill operations
--BOJ Masubuchi says ODR will be ceiling of overnight call loan rate
--BOJ Hayami says risk of overseas, financial markets increased
--BOJ Hayami: Zero rate step very strange under capitalist market
--Hayami: BOJ to continue to study role of ODR, key call rate
--BOJ Hayami: ODR cut decided via voting by majority
--BOJ Hayami says economic recovery mechanism hasn't been destroyed

By Shigeo Kodama, BridgeNews
Tokyo--Feb. 9--Bank of Japan Governor Masaru Hayami said Friday that the cut in the discount rate and measures of improving liquidity provision aren't aimed at avoiding a quantitative easing which the government and coalition party officials are seeking. Hayami speaking to reporters at an emergency news conference after the BOJ announced the discount rate cut to 0.35% from 0.50%, said, "It is inappropriate" to adopt the quantitative monetary easing, in which target will be set on monetary base."
* * * Minoru Masubuchi, BOJ's executive director, said the new discount rate will be a ceiling of the unsecured overnight call loan rate, indicating the meaning of the discount rate has changed.
BOJ policy board members decided to cut the discount rate to 0.35% from 0.50% at the Monetary Policy Meeting but they decided to keep the monetary policy of trading the unsecured overnight call loan rate around 0.25%.
Hayami voiced concern over the future of the economy, saying that risks in overseas and domestic financial markets had increased. But he said the economic recovery mechanism hasn't been destroyed. Hayami said he proposed the discount rate cut at the board meeting today, and the cut has been decided by majority votes. He added the discount rate cut announced today can be regarded as a change in BOJ's monetary policy.
Hayami said the current overnight unsecured call loan rate at 0.25% "is well functioning and (BOJ) does not have to change it," adding that he will continue to study roles of the discount rate and the overnight call loan rate.
Also, Hayami repeated the so-called "zero interest rate policy" is against the principles of a capitalist market.
BOJ plans to start Lombard-type lending, which has already been introduced by the Bundesbank and the European Central Bank, in March, he said. Hayami added that Lombard-type lending was decided upon unanimously at the policy board today.
Under the Lombard-type lending system, if the overnight call loan rate was up to the discount rate level at 0.35%, BOJ will extend loans to financial institutions which keep collateral at BOJ with the discount rate.
Hayami also said BOJ will start to implement improvements in bill purchasing operations by July in order to supply long-term funds in a stable manner. End
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