The Bank of Japan decided Dec. 2 on a set of emergency measures to support corporate fundraising as more companies face difficulty raising operating capital, affected by the global financial turmoil.

Bank of Japan Gov. Masaaki Shirakawa heads for the central bank's Policy Board meeting Dec. 2. KYODO PHOTO

In an extraordinary session, the central bank's Policy Board agreed on the policies in order to encourage banks to lend more to companies, especially smaller businesses, at a time when cash demands are surging so that firms can make it through to the end of the year and fiscal 2008, which ends next March.

Banks and other financial institutions remain cautious about extending fresh loans for fear of defaults amid the worldwide credit crisis.

The eight-member board also left the BOJ's key short-term interest rate unchanged at 0.3 percent.

The new measures are expected to provide an estimated ¥3 trillion to firms through financial institutions during the run-up to the March 31, 2009, end of the current fiscal year, BOJ Gov. Masaaki Shirakawa said at a news conference held after the meeting.

Shirakawa said financial conditions in Japan have become "less accommodative as a whole" as firms, especially smaller businesses, face difficulties raising funds.

As a temporary step effective through April 30, next year, the central bank will extend loans with an interest rate of 0.3 percent to financial institutions in excange for corporate debt pledged as eligible collateral.

Akira Maekawa, senior economist at UBS Securities Japan Ltd., said the emergency measures suggested that "the BOJ is finally realizing the tough environment surrounding small and midsize companies."