Finance Minister Hikaru Matsunaga on Tuesday assured U.S. Federal Reserve Board Chairman Alan Greenspan that Japan’s economic policy will maintain continuity under a new Cabinet.
The two top officials agreed on the need to quickly resolve the problems of the Japanese banking sector, according to a senior ministry official who was present at the meeting in Tokyo.
Matsunaga told Greenspan that the Japanese government intends to reinforce the banking sector with the recently announced plan that includes the “bridge bank” scheme, the official said.
The Cabinet will be reshuffled after Prime Minister Ryutaro Hashimoto is replaced later this month. Hashimoto said Monday he will resign to take responsibility for the Liberal Democratic Party’s massive setback in the Upper House elections Sunday.
Greenspan described to Matsunaga the U.S. experience of coping with its own banking crisis in the late 1980s and early 1990s. He stressed that promoting transactions of collateralized land is the ultimate solution to the bad-loan problem, and Matsunaga agreed.
Greenspan appeared particularly interested in Matsunaga’s account of Japan’s plan to form a public committee to sort out complicated relations among creditors and borrowers, the official said.
Greenspan was in Tokyo to attend the Bank for International Settlements conference of central bank governors Monday and met with Matsunaga during a courtesy visit.
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