Posted by Gilmour Poincaree on November 17, 2008

Published: November 15, 2008, 23:41


Washington: Japanese Prime Minister Taro Aso believes world leaders gathering this weekend to Newly elected Liberal Democratic Party President Taro Aso speaks during a press conference at the party headquarters in Tokyo, Japanconfront global economic turmoil can learn valuable lessons from Japan’s efforts to recover from its own financial crisis in the 1990s, a spokesman said.

During that decade, the world’s second-largest economy was strongly criticised for doing too little to improve its banking sector’s health after a stock and real estate bubble burst.

Aso’s message at the summit is that banks must quickly and fully disclose their non-performing loans and remove them from their balancesheets, spokesman Kazuo Kodama told reporters on Friday.


Leaders have “no luxury to engage in blame games”, Kodama said, but they should engage in “candid soul-searching on why this happened”. Aso, who planned meetings with the leaders of Brazil, Britain, Indonesia, Australia and the European Union, came to this weekend’s gathering of 20 of the world’s biggest developed and developing economies after announcing that Japan was ready to lend up to $100 billion (Dh367.8 billion) to the International Monetary Fund (IMF) to support nations reeling from the global financial crisis.

Kodama said Aso hopes China and countries in the Middle East also will contribute.

He said the IMF and World Bank’s governance structures should be reviewed to reflect better the world economic structure’s changing nature.

Japan has almost $1 trillion in foreign currency reserves, and officials in Tokyo have repeatedly said Japan was ready to provide the IMF with money for rescue packages. The Washington-based IMF has dipped into its reserves to provide emergency loans to Iceland, Hungary and Ukraine worth more than $30 billion.

Financial recovery efforts in Japan have contributed to an environment of more profitable lending; many banks have merged to face global competition, after years of writing off mountains of non-performing loans that piled up after the bubble burst in the early 1990s.

Kodama, in outlining Aso’s position on the economic crisis, said that providing public funds for banks also would help resolve the problem of non-performing loans. He said: “The world should also be making efforts to support the dollar-based currency system, on which the current international economic and financial systems rely.”

Meanwhile, the finance ministers of China, South Korea and Japan also met on Friday evening and agreed that their countries “should play a pivotal role in maintaining economic and financial stability in the region,” according to a joint statement.

They recognised the need to boost financial cooperation and agreed to explore an “increase in the size of bilateral currency swap arrangements” among the countries.

Top finance officials from the countries will hold a financial stability workshop in Tokyo on November 26.




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