Alex, check this out- and you thought gold leasing is bad..Now Paper
leasing...
Japan considers U.S. treasury bond action-report
01:32 p.m Sep 27, 1998 Eastern
TOKYO (Reuters) - The Japanese government is considering lending some of its government-held U.S. Treasury bonds to Japanese banks as an emergency measure to help domestic banks raise dollars, a major Japanese news agency reported Sunday.
Kyodo News Service, quoting ''government sources,'' said that under the plan, Japanese banks would borrow U.S. Treasury bonds held by the Japanese government -- at low interest rates and without collateral -- to get dollar loans from foreign banks by using the bonds as collateral.
A Japanese government spokesman had no comment on the report.
Kyodo said the measure was a way to deal with ''financial instability'' that has led foreign banks to charge a ''Japan premium'' -- the extra interest Japanese banks have to pay on funds raised overseas -- or made foreign banks reluctant to give dollar loans to Japanese banks.
''The plan is aimed at reducing the 'Japan premium' and boosting Japan's sagging stock markets, which are being dragged down by sluggish bank shares, before the Sept. 30 fiscal half-year book closing date, according to the sources,'' Kyodo said.
''The Japanese government holds U.S. Treasury bonds worth more than 50 trillion yen ($367.6 billion), of which it is considering lending 10 trillion yen ($73.5 billion) at an annual interest rate of 0.05 percent and without collateral,'' Kyodo said.
The news agency said that in exchange for lending its U.S. Treasury bonds to the banks on favorable terms, the government is planning to ask them to reduce their overseas assets and publicly release more information on their management.
Earlier Sunday, the Nihon Keizai Shimbun, a major business daily, reported that Japan's Finance Ministry and the Bank of Japan (BOJ) have drawn up emergency measures to help Japanese banks raise dollars.
The newspaper said that under the measures, the government would deposit a portion of its foreign currency reserves with Japanese banks unable to make dollar settlements.
The newspaper said that the BOJ would provide dollars to the banks through ''exchange swap'' deals, in which the central bank will sell the banks' dollars and buy them back after a certain period of time.
Copyright 1998 Reuters Limited. |
