Horst Kohler, managing director of the International Monetary Fund, told Financial Services Minister Hakuo Yanagisawa on Monday that Japan should bolster its financial institutions, according to a Financial Services Agency official.

Kohler was quoted as telling Yanagisawa that he wants to see Japanese financial institutions get stronger via the disposal of nonperforming loans and the restructuring of debtor firms.

During a 15-minute discussion, Kohler also told Yanagisawa that the FSA has made progress in terms of supervising the financial institutions in question, the official said.

Kohler is in Japan to attend a series of events Tuesday to commemorate the 50th anniversary of Japan’s entry into the IMF and the World Bank.

Yanagisawa told Kohler that bad loan disposals have progressed in the wake of special FSA inspections of banks. These probes were conducted in the latter half of fiscal 2001.

Yanagisawa told Kohler that the FSA will cooperate with the IMF in its probe of Japan’s financial system, according to the official.

In June, the IMF launched a Financial Sector Assessment Program here, an investigative procedure that was introduced jointly by the IMF and the World Bank in 1999 following the 1997-1998 Asian financial crisis.

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