Japan warns U.S. economy may be overheating
WASHINGTON, April 27 (Reuters) - Japanese Finance Minister Kiichi Miyazawa on Tuesday called on the United States to maintain prudent policy management as its economy may be overheating.
Miyazawa also said Europe should establish the credibility of the euro and continue responding to cyclical changes to its economy.
Miyazawa made the comments in a statement to a meeting of the International Monetary Fund's Interim Committee. A text of the statement was released in advance.
''In the U.S. there are concerns about the possibility of overheating. The U.S. authorities are thus expected to maintain prudent and appropriate policy management,'' Miyazawa said.
Japan has come in for persistent economic criticism from the United States, with Washington calling for it to boost domestic growth.
In his statement, Miyazawa also expressed optimism in the economy of Asia, saying that economic fundamentals in the region remained favorable.
''If they (Asian nations) continue to actively pursue economic reform by addressing their problems, in particular, corporate debt and troubled financial sectors, I believe that the Asian economies will steadily recover,'' Miyazawa said.
Japan itself remained in a difficult condition, he said.
In the fiscal year that began this month, Japanese financial institutions are expected to further dispose of non-performing loans, which will remove impediments to an economic recovery, Miyazawa said.
Miyazawa also said that a closer monitoring of international capital flows was needed to maintain market stability and integrity.
''If we are to benefit from the efficient allocation of capital brought by the free movement of capital, we must respond appropriately to the enormous risks involved,'' Miyazawa said.
''It is essential to strengthen monitoring of capital flows on the part of creditors, in addition to close monitoring by the recipient country,'' he said.
Ever since the problems of giant hedge fund Long-Term Capital Management surfaced last autumn, there was stronger awareness that problems of highly-leveraged financial institutions could generate risks in the financial systems of industrialized economies, Miyazawa said.
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