Japan and the other Group of Seven economic powers should remain vigilant against a possible aggravation of the credit crunch stemming from the U.S. mortgage loan problem as its impact on the real economy is still unknown, according to a former senior Finance Ministry official.
"The subprime mortgage loan problem is much more serious than widely thought in Japan, although optimism is growing here as Japanese financial institutions incurred few losses," Eisuke Sakakibara said in a recent interview.
Sakakibara, who was known as "Mr. Yen" for his influence on currency markets when he was vice finance minister for international affairs from 1997 to 1999, said, "What we are witnessing could be the kind of adjustments that occur once in some 10 years, similar to the financial currency crisis in 1997-1998."