The growing reluctance of Japanese banks to lend, which is hurting the domestic industry, is also affecting other parts of Asia, the head of the Hong Kong Monetary Authority said Tuesday in a meeting with his Japanese counterpart in Tokyo.
Joseph Yam told Bank of Japan Gov. Yasuo Matsushita that he hopes the yen will stabilize and that Japan's economy will recover to help stabilize Asia's economies, according to Takashi Anzai, a BOJ executive director. Yam said he feared there would be adverse effects on Asian economies when the yen weakened to a level around 130 to the dollar, Anzai told reporters.
Matsushita explained that Tokyo's plan to inject capital, in the way of public funds, into Japanese banks is designed to alleviate the tight lending problem by boosting banks' capital levels. In the 30-minute closed-door meeting, Yam expressed Hong Kong's intention to maintain its currency board, which pegs the value of the Hong Kong dollar to the U.S. dollar, Anzai said.