BOJ not considering emergency fund injection over Greece yet: sources

[TOKYO] Developments in the Greek debt crisis and the Asian financial market reaction so far have yet to alarm the Bank of Japan enough to consider offering emergency liquidity, officials familiar with its thinking say.

If the deepening crisis triggers global market turmoil and risks hurting Japan's banking system, the BOJ's first response would be to offer massive, short-term funds in emergency market operations to calm investors, they said on Monday.

Such action was taken in times of crises such as the global market turmoil caused by the collapse of Lehman Brothers in 2008 and the devastating earthquake that struck Japan in 2011. "More time is needed to scrutinise the second-round effects" of the developments in Greece, said one official on condition of anonymity.

While the BOJ is hardly complacent and is ready to inject liquidity if market tensions heighten, it likely sees little need to act immediately with Tokyo markets awash with funds due to its aggressive monetary easing, the officials said.

Major central banks always share information on market developments and have backstops in place in case the ripple effect of Greece turns out to be worse than expected, the officials say.

The euro fell almost 2 per cent and share prices tumbled across Asia on Monday as Greece looked set to default on its debt repayment this week, forcing Athens to impose capital controls to halt bank runs.

REUTERS