Japan’s economic fundamentals are strong enough to put it on a recovery track, but timing is a vital element in securing an upswing, central bank governors from the world’s key economies agreed Monday.

At the Bank of Japan’s headquarters in Tokyo, central bank governors from more than 30 economies convened for a monthly meeting of the Bank for International Settlements.

According to officials at the BOJ, which hosted the one-day meeting, the participants also included nonmember banks from Thailand, Indonesia and other Asian economies. It was the first time the BIS has held such a meeting outside Europe, and only the second time it has convened other than at BIS headquarters, in Basel, Switzerland.

The meeting took place amid growing concern over a possible delay in Japan’s implementation of recently adopted financial reform measures, especially the “bridge bank” plan adopted July 2, due to the LDP setback in Sunday’s election.

The Japanese side explained the current situation of its economy at the meeting and said the government hopes to submit bills to implement the bridge bank scheme during an extraordinary Diet session to be convened later this month, with hopes to enact it as early as September.

The results of Sunday’s Upper House election, however, dealt a heavy blow to the ruling Liberal Democratic Party and led Prime Minister Ryutaro Hashimoto to announce Monday that he would resign.

The meeting, chaired by Bundesbank President Hans Tietmeyer, then focused on the issue of stabilizing currencies after the financial crisis that shook Asia last year. After the day’s session ended, Tietmeyer told a news briefing that Japan’s current economic condition was a topic being discussed among the central bank heads present.

“Japan will overcome its problems in a short time. We see the chances looking at the fundamentals and resources of this country,” he said. “This can be done and will be done, and markets should look at the potential of the country.” Tietmeyer added that participants at Monday’s meeting did not discuss foreign exchange rate issues.

BIS President Alfonts Verplaeste also expressed confidence in the recovery of the Japanese economy. “They (market participants) should make a distinction between the fundamentals and problems of this country,” he said. “One should not confuse the one with the other. Fundamentals are lasting, and solving the problem is a question of time.”

Meanwhile, BOJ Gov. Masaru Hayami, concerned about the possible political turmoil following the Upper House election, urged the government to implement its economic remedy plans as soon as possible. “As BOJ governor, I refrain from making comments on political matters, but whoever replaces the present administration will have to deal with two imminent problems — restructuring the financial system and reviving the economy,” he said.

Ahead of the meeting, Hayami met with U.S. Federal Reserve Board Chairman Alan Greenspan. Although the details of the breakfast meeting were not provided, Hayami is believed to have sought U.S. support for Japan’s various economic reform measures.

Greenspan was scheduled to meet with Finance Minister Hikaru Matsunaga today.

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