Overview
- Two people familiar with talks told Reuters that JPMorgan and other U.S. banks are close to agreeing to provide some financing, though Japan’s Ministry of Economy, Trade and Industry said no decisions have been made and any choice rests with the banks.
- So far only $2.2 billion has been committed to the scheme, with roughly one-third from the state-backed Japan Bank for International Cooperation and the rest co-financed by Japan’s three megabanks.
- Japanese commercial lenders have resisted larger roles because their deposits are in yen and raising long-term U.S. dollars is costly due to higher U.S. interest rates and hedging expenses.
- Tokyo has discussed ways to ease dollar access for its banks, including reports about using foreign exchange reserves, while Washington has provided a list of candidate U.S. projects that would receive investment.
- Key questions remain over how much U.S. banks would supply, which projects they would fund, whether the U.S. government would take part, and how lenders will handle decades-long repayment and project risk.