Asian bankers urge Japan to act
Asian bankers urge Japan to act
TOKYO (Reuters): Asia-Pacific central bankers, meeting in Tokyo yesterday, urged Japan to take decisive measures on its economy and agreed they would provide each other with yen in times of tight liquidity.
"In view of the recent shock depreciation of the yen, they noted the various interdependencies of the economies in the region, particularly the importance of Japanese financial development for other economies," said Takashi Anzai, an executive director of the Bank of Japan.
But the central bankers made no suggestions about possible additional steps Japan could take to boost its economy, Anzai told reporters.
The Executives' Meeting of East Asia and Pacific Central Banks met against a backdrop of political uncertainty and market apprehensiveness in Japan.
Prime Minister Ryutaro Hashimoto said on Monday he would resign to take responsibility for the disastrous showing by his ruling Liberal Democratic Party in parliamentary elections on Sunday.
BOJ Governor Masaru Hayami was one of those expressing concern about recent medium-term weakness of the yen, Anzai said.
Separately, German central bank chief Hans Tietmeyer said he would like to see the yen rise, and urged Japan to swiftly implement its promised steps to boost the economy and bolster the financial system.
Tietmeyer told Finance Minister Hikaru Matsunaga that the yen's weakness was unfavorable for Asia, a Japanese official said.
On promised measures to wind up failed banks while maintaining credit to healthy borrowers, Tietmeyer said in a speech: "I hope there will not be any delay, because if that would be the case, this could be risky for the development of international markets."
U.S. Federal Reserve Chairman Alan Greenspan, meeting separately Matsunaga, agreed that a swift solution of problems in the Japanese financial sector was of great significance, a Finance Ministry official said.
Greenspan did not make any fiscal policy requests at the meeting, he added.
The Asia-Pacific central bankers agreed to provide yen liquidity through either outright purchases or under repurchase agreements, using Japanese government bonds and bills as collateral.
The meeting also discussed the importance of liberalizing capital accounts in an orderly and well-managed manner.
Anzai said some Asian countries were forced to liberalize their capital accounts due to the regional financial crisis, but had failed in developing an environment for such a move to succeed.
"I think some countries would like a more stable exchange rate system rather than a free-floating system," he said.
The meeting was attended by central bank chiefs and deputies from Australia, China, Hong Kong, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea and Thailand. It followed a Monday gathering of Western central bankers, including Tietmeyer and Greenspan.