The central bank of Japan on Friday announced it will offer zero-interest loans to aid financial institutions in efforts to address the challenge of climate change.

Under a new funding program, the Bank of Japan (BoJ) will give “one-year, zero-interest funds to financial institutions for their loans and investments in such products as green bonds to tackle climate change,” Kyodo News reported.

“Rollovers will be allowed for an unlimited number of times under the scheme that will be effective until March 2031,” the report said.

The government of Prime Minister Yoshihide Suga has vowed to reach its goal of carbon neutrality by 2050.

Many banks in Japan have stopped funding new coal-fired power plants.

The BoJ move is also seen to be in line with the European Central Bank and the Bank of England’s plan “to factor climate change considerations into policy,” the report said.

The US Federal Reserve, however, has expressed reservations, saying that “climate policy is for elected officials.”

On the recovery of the pandemic-hit economy, the BoJ said: “Japan’s economy has picked up as a trend, although it has remained in a severe situation due to the impact of COVID-19 at home and abroad.”

In its latest assessment, the bank said the Japanese economy will grow at 3.8%, a slight downward revision from its earlier projection of 4.0%.

Copyright 2022 Anadolu Agency. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.