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Saturday, June 20, 1998 Published at 11:25 GMT 12:25 UK


Business: The Economy

Japan told to sort out crisis

Summers: wants swift action to curb the crisis


The BBC's Tokyo correspondent, Juliet Hindell: Markets will tell on Monday
Top financial officials from the world's leading industrialised countries and Asia have told Japan it must revive its economy and reform the way its financial system operates.

They said reform was urgently needed to ensure recovery not just in Japan, but globally.

But despite Japanese assurances that Tokyo would take prompt steps to deal with the crisis, no indication emerged from the conference of any specific plans.

The crisis has its roots in $500bn of bad debts held by Japanese banks.


The BBC's Tokyo correspondent, says the meeting has not achieved a great deal
The final statement says that the important thing is to restore confidence and growth in the countries most affected by the crisis and to achieve stability in exchange rates and contain inflation.

To do this, reforms to restructure and recapitalise financial sectors will be needed.

It also says that the revitalisation of the Japanese economy is urgently needed and welcomes the intervention of the United States and Japan on the exchange markets to control the price of the Yen.

The delegates agreed to co-operate further if appropriate.

Promise to act

During the crisis talks, the Japanese Finance Minister Hikaru Matsunaga sought to reassurance the international community.

He repeated that Tokyo would act quickly to deal with debts and improve regulation in the financial sector.

But the man they call Mr Yen for his influence on the foreign exchanges said there were no secret initiatives and he could not control the markets.

The American Treasury Secretary, Robert Rubin, has said the debt question is the most urgent economic issue facing Japan, with crucial implications for the regional and global economies.

The US Deputy Treasury Secretary, Lawrence Summers, who attended the talks, spent Friday meeting the Japanese finance minister and other officials.

He pressed Japan to act quickly to bolster the economy, warning that the good effects of the intervention in the currency markets last week might not last for long.

The crisis talks were attended by ministers and officials from the Group of Seven leading industrialised nations and 11 Asian countries, including China.

Representatives from the International Monetary Fund, the World Bank, and the Asia Development Bank were also present.

During the week, the Japanese and US Governments poured millions of dollars into the financial markets to bolster the value of the yen.



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