High-Level Talks on Global Crisis End
With No Commitment From Japanese
Dow Jones Newswires
SAN FRANCISCO -- A meeting of top U.S. and Japanese officials that
President Clinton billed as "profoundly important" to the world economy
ended without concrete results Friday as Japan said domestic politics
prevent it from quickly jump starting its economy.
U.S. Treasury Secretary Robert Rubin met Japanese Finance Minister
Kiichi Miyazawa, who said he understood the urgency for banking reforms
and a fiscal stimulus in his country. But Mr. Miyazawa made no pledge
beyond what Japan has already announced -- that it will take "all possible
steps to promote financial stability."
At a press conference after the meeting, Mr.
Rubin said he was hopeful that Japan will act
quickly, saying it has shown an inclination in
the last few months to cut taxes and rescue
troubled banks. But he said a judgment about
Japan's commitment to reform can only be
made "once Japan acts."
But Mr. Miyazawa's response was lukewarm. The Japanese finance
minister said that political compromise between Japan's ruling Liberal
Democratic Party and opposition parties will be necessary for Japan's
banking reforms to be enacted successfully. He didn't offer any concrete
schedule for the passage of plans.
Mr. Miyazawa said that Japan would ensure the country's major banks
don't fail so that the global banking system won't be disrupted. "The
Japanese government will use public funds to avoid collapse of a big bank"
such as the Long-Term Credit Bank of Japan, Mr. Miyazawa said.
Concerning the recent rapid decline of the dollar against the Japanese
currency, both Messrs. Miyazawa and Rubin said there was 'no discussion
on concrete levels of the dollar/yen rates." Mr. Rubin said the U.S.
continues to favor a strong dollar. The U.S. hasn't intervened to prop up
the yen since June, when it acted in concert with the Japanese monetary
authority.
Noting that the financial contagion that began in Thailand last year has
spread around the globe, Messrs. Rubin and Miyazawa called on the
Group of Seven leading industrial nations to 'pursue appropriate policies to
promote sound financial systems and strong, sustainable growth." But
neither side called for concerted interest-rate cuts, as was suggested
Thursday by Rep. Jim Saxton (R., N.J.), chairman of the Joint Economic
Committee in the U.S. Congress.
Mr. Rubin said Mr. Miyazawa didn't propose concerted rate cuts, and so
the subject wasn't discussed. The U.S., for its part, so far sees no need to
change monetary policies that have resulted in a combination of robust
growth and low inflation.
"In our view the fundamentals of the U.S. economy are solid," Mr. Rubin
said. "The key is for the U.S. to continue to follow sound policy." The
international financial crisis has slowed U.S. growth, he said, but "the
probability of a severe crisis that has major effects on the U.S. is low."
Messrs. Rubin and Miyazawa are expected to continue an informal
discussion over dinner late Friday, but both U.S. and Japanese officials
have said they expect no major outcome. Federal Reserve Chairman Alan
Greenspan is scheduled to attend the dinner meeting. |
