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WORLD> Asia-Pacific
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Japan to offer IMF up to $100 billion from fx reserves
(Agencies)
Updated: 2008-11-13 14:35 Growing economic fears include a risk of widespread deflation as oil and other commodity prices fall, with Japanese annual wholesale inflation sliding sharply in October.
Finance ministry officials have told Reuters that Japan's previous offer of funds for the IMF had not been taken up because the Washington-based multilateral agency had sufficient funds. The future of big agencies such as the IMF and World Bank will be debated at this week's summit. Japan has said the IMF should improve its surveillance over financial markets as well as its early warning capabilities but it remains cautious about giving the Washington-based lender a regulatory role. France, which holds the rotating European Union presidency, is leading a drive for tough new regulations and supervision on financial markets, but how to tighten without squelching the innovation that spurs economic growth is a difficult challenge. The United States and Britain fear too much regulation could suffocate markets and hurt the global economy, while Japan has been less clear as to precisely where it stands in the debate. "We think that innovation and freedom of the market is of utmost importance for the world economy. This is our very solid belief," the foreign ministry official said. "At the same time, we need a certain level of regulation, and sound regulations." Aso has said the financial crisis underscored problems of reckless lending, lack of transparency on securitised products and questionable rating methods by credit rating agencies. Japan's economy shrank at the fastest pace in seven years in April-June, and some analysts think it may have contracted again in the following quarter, which would meet the most common definition of a recession. The median forecast in a Reuters poll for July-September gross domestic product, due out on Monday, is for an increase of 0.1 percent. |
