Japan lending more cash to banks

The Bank of Japan has also cut interest rates to try to boost the economy

The Bank of Japan (BOJ) is lending the country's banks 1.22 trillion yen ($13bn; £8.7bn) in emergency cash.

The central bank's decision to provide unlimited loans is the latest measure taken by authorities to bolster Japan's shrinking economy.

The BOJ is trying alternative ways of encouraging bank lending, after cutting rates to just above zero last month.

Japan's economy, the world's second-largest, is in its first recession since 2001.

The BOJ will accept bonds and shorter-term debt, such as commercial paper, as collateral until the end of March in return for the ultra-cheap loans, on which it will charge 0.1% interest.

The move is designed to persuade banks to lend more money to businesses.

In December, the Japanese government increased its economic stimulus package to 23 trillion yen after the global downturn and surging yen sapped demand for the country's exports.

The government is forecasting no economic growth for 2009.