Japan seems to be afraid to take to close of a look at how many bad loans are in their banking system.
It's Interesting that even the IMF would like to try to get a better handle on this issue.......
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IMF Seeks to Monitor Japan Bank System
As Economic-Stability Concerns Increase
By ARRAN SCOTT and MICHAEL WILLIAMS
Staff Reporters of THE WALL STREET JOURNAL
August 31, 2001
TOKYO -- The International Monetary Fund has asked Japan for permission to send inspectors to monitor the country's banking system, in the latest sign of mounting worries about the Asian economic power's stability.
Japan's Financial Services Agency so far has balked at the IMF's request, which is aimed at checking Japanese banks to ascertain the size of Japan's bad-loan program, an IMF official in Tokyo said. "We have made a formal request," IMF Asia and Pacific director Kunio Saito said. "So far, Japanese authorities haven't responded very positively."
Japan's Prospects Dim Further as Spending, Output Wither
Japan's financial-services minister, Hakuo Yanagisawa, said he is "very open to the idea of the IMF talking to the FSA and to financial institutions directly," but said it would be difficult to do so immediately, because the FSA lacks manpower to handle an inspection team.
The IMF inspection would take place under an existing monitoring program called the Financial Sector Assessment Program. But the IMF's request underscores growing world concern about Japan's creaky banks, which are burdened by hundreds of billions of dollars of nonperforming loans.
In a recent report on the Japanese economy, the IMF urged the government to consider injecting fresh capital into Japan's banks if needed -- a politically unpopular action that Japan took in 1999 amid a near financial panic, but which the country's regulators insist isn't necessary now. The IMF report cited estimates by private-sector analysts that the banks may have to take 20 trillion yen to 30 trillion yen ($166 billion to $250 billion) more in charges on their loan losses than the FSA expects. Top officials of that agency publicly blasted the IMF for relying on analysts' estimates instead of using its own experts to gauge the situation.
In seeking to send in inspectors, the IMF has put the spotlight back on Japanese regulators, who for nine years have issued bad-loan estimates that proved to be too low. And regulators repeatedly have declared an end to the nation's bad-loan problem, only to have it flare up again. The IMF request comes just days after Japanese regulators hedged on a recent vow to fix the worst of the bad-loan problem, which resulted from a collapse in property prices a decade ago and mounting bankruptcies of borrowers amid a prolonged slump.
The FSA said this week it may take as long as three years before the level of bad loans at Japanese banks goes down at all, as the bad debts that banks write off will be offset by new bad loans. |
