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To: Ahda who wrote (8232)	3/11/1998 3:25:00 PM
From: posthumousone	Read Replies (2) \| Respond to of 116814

is Japan selling us bonds? wont that in turn raise our interest rates? how signaificant of a sell by japan would induce an interest rate hike?

To: Ahda who wrote (8232)	3/11/1998 3:31:00 PM
From: Richard A. Green	Read Replies (1) \| Respond to of 116814

Bank of Japan raided - Reuter's story FOCUS-Bank of Japan raided, chief may have to go (Adds Hashimoto said to suggest Matsushita should go) By Hiroaki Ichikawa TOKYO, March 11 (Reuters) - Prosecutors on Wednesday staged an unprecedented raid on the Bank of Japan, arresting a senior official in a bribery scandal that could topple the head of the nation's central bank. The widening probe -- showing no signs of slowing -- has already plunged the powerful Ministry of Finance into turmoil, with the arrest of four ministry bureaucrats and the resignation of the finance minister in January. The latest target of the investigation is Yasuyuki Yoshizawa, head of the Bank of Japan's capital markets division and in charge of its daily money market operations meant to keep banks' funding on track. The raid on Japan's most sacrosanct financial institution set off demands for the resignation of BOJ Governor Yasuo Matsushita, elder statesman of Japan's economic establishment. Late on Wednesday the NTV television network quoted an opposition party lawmaker saying that even Prime Minister Ryutaro Hashimoto believed Matsushita should be replaced. Matsushita, 72, whose five-year term still has two years to run, said that he wanted to remain in his post to help the inquiry but also hinted that he might have to take the traditional Japanese route of quitting to accept the blame. "The one with the greatest supervisory responsibility is the person at the head of the organisation, which is me," he told a news conference. "Measures appropriate to the scale of the supervisory responsibility are needed," he added. The sight of dozens of prosecutors trooping into the BOJ building in central Tokyo mirrored a raid on the elite Ministry of Finance last week, when two officials were arrested there for passing on inside information about securities operations. Hashimoto said the scandals were causing both Japanese and overseas markets to lose confidence in Japan's once proud and respected financial institutions. "In addition to previous scandals, today we had the arrest of a BOJ official, and it is not easy to regain confidence in the financial sector," Hashimoto said. The later television report quoted Hashimoto as saying that it was not good for Japan to have Matsushita representing the nation at such key events as Group of Seven (G7) meetings of finance ministers and central bankers. Ironically, the scandal comes just as a new law aimed at boosting the BOJ's autonomy by reducing the scope for Finance Ministry interference is set to take effect from April 1. A prosecutors' statement said allegations against Yoshizawa were that he was wined, dined and treated to golf games by the Industrial Bank of Japan (IBJ), the biggest of the nation's long-term credit banks, and by Sanwa Bank, one of Japan's six main "city" banks. The prosecutors' statement said that, over a total of nearly 90 occasions from 1993 to 1997, Yoshizawa was suspected of accepting golf outings, food and drink worth 4.3 million yen ($33,000) from the two banks. In return, Yoshizawa allegedly gave the two banks advance information on the top-secret daily money market operations which determine short-term interest rates. He also passed on inside information about other commercial banks, the statement said. He is also accused of arranging special treatment for Sanwa in setting up collateral when borrowing from the central bank. Hours before his arrest, Yoshizawa told Kyodo news agency the entertainment he had received was within the bounds of "social courtesy" and did not involve special favours. "I never received excess entertainment," he said. Japanese media reports said other BOJ officials and banks were also under investigation. The reports said Sumitomo Bank, Sakura Bank, the Bank of Tokyo-Mitsubishi and Fuji Bank were also under investigation. The Tokyo Shimbun daily, talking of a "merry-go-round" of wining and dining, said prosecutors were probing allegations that two of Yoshizawa's superiors also accepted meals, golf trips and other favours from commercial banks. The dollar rose nearly one yen to 128.30 yen on the latest news and traders forecast a further surge if Matsushita stepped down as head of the BOJ. Japan's chief government spokesman said Matsushita bore responsibility for the scandal. "Matsushita obviously bears responsibility as the supervisor but I will not comment on whether he should resign or not before the investigation has revealed the case in its entirety," Chief Cabinet Secretary Kanezo Muraoka told reporters. Matsushita is a former administrative vice finance minister -- the Finance Ministry's top bureaucrat -- and joined the private sector in 1986. Market analysts said Matsushita may have no choice but to go. "That's the way it works in Japan. The top guy takes responsibility for the misdeeds of those below him," said Kenneth Landon, senior currency strategist at Deutsche Morgan Grenfell. "It's the ritualistic falling on one's sword." Picking a successor to Matsushita could be difficult. For more than two decades, the governorship has alternated between former Finance Ministry officials and BOJ career bureaucrats. That would mean that Senior Deputy Governor Toshihiko Fukui would be next in line, analysts said. Some critics questioned whether an insider was best placed to clean up the bank and speculation has emerged that Fukui himself may have to step down over the scandal. Appointing an outsider, meanwhile, would be almost unprecedented, and with private bankers most likely ineligible because of their institutions' possible role in the scandals, finding an experienced candidate could be tough. REUTERS Rtr 14:40 03-11-98 Copyright 1998, Reuters News Service