Decisive measures, including the use of public funds to protect depositors, are necessary if Japan wants to restore confidence in its financial sector at home and abroad, the managing director of the International Monetary Fund said Thursday.

The suggestion that public money be used to support the financial sector came during an afternoon meeting between Michel Camdessus and Prime Minister Ryutaro Hashimoto, according to government officials. Camdessus, who was in Tokyo for the inauguration of the IMF’s Regional Office for Asia and the Pacific, told a news conference that Japan is at an important juncture in its economic cycle, adding that the problem with the economy is “basically one of confidence,” especially in its financial institutions.

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