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The Bank of Japan will consider buying green bonds as part of a joint effort among Asian central banks to promote the region’s bond market, said a source with knowledge of its thinking.

The BOJ will make the purchases through the “Asian Bond Fund”, which was created in 2005 by a forum for the region’s central banks dubbed the Executives’ Meeting of East Asia-Pacific Central Banks (EMEAP), the source said.

The move would be separate from another BOJ plan, announced last month, to create a scheme that offers cheap funds to financial institutions that lend to or invest in activities aimed at combatting climate change.

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It will likely be part of an Asia-wide effort to support the region’s development of local currency-denominated bond markets.

The BOJ declined to comment.

In a statement issued on Monday, EMEAP said its members have agreed to promote investment in green bonds through the fund and requested IHS Markit to review the rule of its iBoxx ABF Index – an index designed to reflect the performance of local currency denominated debt – to promote the inclusion of green bonds.

“This is aimed at helping to catalyze further deepening of local currency-denominated green bond markets in the region,” EMEAP said in the statement.

The BOJ is expected to announce a range of measures it will take to combat climate change as early as this month.

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