U.S. paper urges Japan to promote reforms, unload bank debts.
Japan should promote structural reform and press banks to write off bad loans, while boosting liquidity by selling yen and implementing tax cuts to encourage consumer confidence, the Wall Street Journal proposed Tuesday.
The leading U.S. financial newspaper said in its editorial that the Bank of Japan (BOJ) should buy dollars and sell yen to depress the strong yen and to boost liquidity.
''A simpler solution would be to issue yen by buying dollars, which of course would depress the strong yen -- a medicine Japan would at this point be wise to accept,'' the journal said.
It also said that even if Prime Minister Yoshiro Mori is a lame duck, the U.S. administration can offer advice along these lines when Mori visits Washington later this month.
''While Treasury Secretary Paul O'Neill hasn't publicly lectured the Japanese...he no doubt recognizes that a deep crisis in Japan would have a huge impact on the U.S. economy,'' it said.
The U.S. paper said a package of economic measures unveiled last Friday by Japan's ruling coalition does not seem to be a clean break with the ''fiscal stimulus'' approach.
''That will encourage ordinary Japanese to continue behaving rationally by saving their earnings instead of consuming; they know they will eventually be called on in one form or another to pay for the government's profligacy,'' it said.
The only way to change their thinking is to cut back government spending, undertake structural reform and encourage banks to write off bad loans and turn down high-risk borrowers, the paper said.
''The central bank should make it a point to facilitate this process by supplying liquidity, but it has to have some fiscal and structural help to make it happen,'' it added.
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|Publication:||Japan Weekly Monitor|
|Date:||Mar 19, 2001|
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