TOKYO: Banking sector problems in the United States and Europe were caused by liquidity and interest rates risks, but won’t impact on Japan’s economy and financial system for now, Economy Minister Shigeyuki Goto said on Tuesday.
Goto spoke to Reuters in an interview after US regulators seized First Republic Bank and sold its assets to JPMorgan Chase & Co, in a deal to resolve the largest US bank failure since the 2008 financial crisis and draw a line under a lingering banking turmoil.
“What happened to the West involved risks of liquidity and interest rates. Financial institutions and authorities will need to respond firmly to liquidity risks,” Goto said. “I don’t see the US financial sector facing big problems.”
Asked if the US banking woes may cause a delay in any Bank of Japan efforts to normalise its easing policy down the road, Goto said he expected the central bank to steer policy flexibly and appropriately, without elaborating further.
Risk factors warrant attention such as downward any revision to forecasts for the world economy and financial market fluctuations as Western countries continue to tighten monetary policy, he added.
“The BOJ as central bank should tackle monetary policy operations, but I don’t see the current financial situation impacting Japan’s economy and financial sector as a whole. “I expect the BOJ to guide monetary policy flexibly, meaning that the central bank should do so appropriately taking economy and financial markets into account.”
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On Friday, the BOJ kept ultra-low interest rates but announced a plan to review its past monetary policy moves, laying the groundwork for new Governor Kazuo Ueda to gradually phase out his predecessor’s massive stimulus programme.
Goto said it would be “difficult” to tap sales tax revenue as a funding source to pay for additional childcare spending given the fragile state of the Japanese economy.
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