The government welcomed on Monday the U.S. bailout plan of troubled mortgage finance giants Fannie Mae and Freddie Mac, saying the measure is expected to help stabilize the financial markets.
"We welcome the plan as an appropriate measure, as it is believed to contribute to stabilizing the financial markets and help facilitate the U.S. housing market," Chief Cabinet Secretary Nobutaka Machimura told a news conference.
He said the U.S. rescue package is in line with Japan's proposal to inject public funds into the troubled finance firms.
The top government spokesman also said he hopes the fresh step by the U.S. government will have a favorable impact on the global economy, saying a sharp rise in Tokyo stock prices and the dollar's advance against the yen and other currencies underpinned such a view.
Finance Minister Bunmei Ibuki also hailed the measure.
"Given that the dollar is a key international currency, Japan welcomes the U.S. action" on Fannie Mae and Freddie Mac, Ibuki said. "It may sweep away concern about the U.S. economy and stabilize U.S. financial markets, having a positive impact on the global economy."
Ibuki said U.S. Treasury officials probably contacted their counterparts at the Finance Ministry before the announcement.
"There would have been notice, though it wasn't directly given to me," Ibuki said. The Treasury probably informed Finance Ministry officials "at the deputy level," he said.
Ibuki also said the move may benefit Japanese financial institutions because the U.S. said it would provide some guarantee of Fannie Mae and Freddie Mac bonds that they hold.
Japanese financial institutions own a large amount of bonds issued by the two U.S. mortgage firms and repercussions on their business performances have been feared.