Japan PM Abe urges BOJ to ensure market liquidity after vote

Japanese Prime Minister Shinzo Abe on Wednesday urged the central bank to provide ample funds to the market to ensure liquidity and keep the wheels of economy turning in the wake of Britain's shock vote to exit the European Union.

"A sense of uncertainty and worry about risks remain in the markets," Abe told a meeting between the government and the Bank of Japan to discuss market developments after the Brexit vote rocked global financial markets.

It was the second meeting between Abe and the BOJ following the referendum and more are expected as Tokyo looks to put in place safeguards against potential instability in financial markets after Britain's messy EU divorce.

Abe worries Brexit could spread financial turmoil and trigger an unwelcome spike in the yen, hurting the export-reliant economy as a July 10 national election draws near.

The rush of money to safe havens such as the yen has been stoked by fear Brexit would adversely affect Britain's economy, and undermine already fragile growth in the EU, causing more disruption in global investment and trade.

Companies asked the central bank to loan them $1.47 billion in its regular dollar-supplying operation on Tuesday. That was far greater than its last operation before Britain's vote, but still less than the tens of billions of dollars the BOJ supplied in operations after the 2008 collapse of Lehman Brothers

BOJ Governor Haruhiko Kuroda told reporters after the meeting that the dollar-supplying operation was a backstop and the central bank stands ready to provide dollars as much as possible when necessary.

"At the moment Japanese banks are equipped fully with dollars and foreign currencies. In that sense, the scale (of the dollar-supplying operation) was small and I don't think there's any problems at all with Japanese banks' dollar funding."

At the meeting, Abe also called on Finance Minister Taro Aso to keep close watch on currency and financial market moves, and respond flexibly to economic and market developments in close coordination with Group of Seven advanced economies.

The government was ready to mobilise all policy tools to support Japan's economy and small firms, Abe added.