Japan Weighs Dollar Funding Support for Banks Under $550 Billion U.S. Investment Deal

The Japanese government is considering measures to help the country's largest banks secure U.S. dollar funding for investment projects under Japan's $550 billion agreement with the United States, according to a source familiar with the matter, Kyodo News reported.

MUFG Bank, Sumitomo Mitsui Banking Corp., and Mizuho Bank have expressed concerns about the cost of raising long-term U.S. dollar funding. (Photo: MUFG)

Prime Minister Sanae Takaichi's administration is reviewing a request from MUFG Bank, Sumitomo Mitsui Banking Corp., and Mizuho Bank, which have expressed concerns about the cost of raising long-term U.S. dollar funding.

"It is impossible to secure dollars on our own to finance all the U.S. projects under the trade agreement," a source from one of Japan's major banks said.

According to the report, Japan's Ministry of Finance is discussing a funding framework with the government-backed Japan Bank for International Cooperation (JBIC).

One option under consideration would allow the use of U.S. dollars held in the government's Foreign Exchange Fund Special Account, which is normally used for foreign exchange market interventions.

The bilateral agreement reached last year includes $550 billion in investments, loans, and loan guarantees backed by Japanese government financial institutions.

The first round covers approximately $36 billion in projects, including a gas-fired power plant, while a second phase worth up to $73 billion includes projects such as small modular nuclear reactors.