TOKYO (MNI) – Finance Minister Jun Azumi on Tuesday repeated his
opposition to a private-sector proposal to buy foreign bonds under a new
large-scale government fund worth Y50 trillion, saying it would go
against Tokyo’s currency intervention policy.
Azumi told the lower house Financial Affairs Committee that under
the proposed plan, the Ministry of Finance would have to issue financing
bills totaling Y50 trillion, which would then be used for buying bonds
denominated in foreign currencies.
“It is highly likely that it would be in effect equal to conducting
a foreign exchange intervention. In this regard, I told the meeting that
it would run counter to our existing viewpoint,” he said.
Azumi was referring to the Oct. 28 meeting of the National Policy
Unit, a government strategy council led by Prime Minister Yoshihiko
Noda.
At the meeting, former BOJ deputy governor Kazumasa Iwata proposed
that Tokyo create a “financial crisis prevention fund.” Under his plan,
the BOJ would pump about Y50 trillion into the fund, which would buy
bonds issued by the European Financial Stability Facility and other
foreign-currency debt.
Iwata pointed that such purchases might help stem the yen’s
excessive yen rise against the dollar and other currencies, and that the
fund may contribute to market stability by buying European sovereign
bonds.
The BOJ intervenes in the currency market on behalf of the Ministry
of Finance, which sets Japan’s intervention policy.
Iwata served as one of the two deputy governors and a member of the
policy-making board at the central bank from 2003 to 2008. He is
currently president of the Japan Center for Economic Research.
tokyo@marketnews.com
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