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.