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Tuesday, 6 March, 2001, 13:37 GMT
Japan may drop zeros from yen
Man drags load of 2,000 yen banknotes
The 2,000 yen banknotes could be shrunk to 20 yen
Japan's ruling Liberal Democrat party is mulling rebasing its currency, according to national press reports.

The change would mean that a couple of zeros would be lopped of the end of the yen, making one unit worth a hundred times more.

One dollar now buys about 118.5 yen, but the change would mean that one dollar would buy just 1.185 yen.

Some politicians believe that greater parity with the dollar and the pound would improve the currency's international status.

The change could be part of a long-promised package of policy changes to be unveiled later this week, aimed at adding support to the ailing economy.

Pros and cons

A currency re-alignment would generate a significant amount of work in order to adapt the nation's computer and administrative systems.

The value of the yen, 1200 GMT
One dollar = 118.5 yen
One euro = 109.7 yen
One GB pound = 173.9 yen
And production of the new yen notes would increase the workload of the country's printing industry.

But there could also be harmful side-affects, such as opportunistic price rises during the conversion period.

The Japanese Finance Minister Kiichi Miyazawa has denied that he has plans to redenominate the yen in order to prop up the economy.

Controversy

But some key politicians from the ruling Liberal Democratic party (LDP) are reportedly still pushing for the plan to be adopted.

And the government's spokesman, Yasuo Fukuda, said that it was "basically not a bad idea".

The proposed value of the yen
One dollar = 1.18 yen
One euro = 1.1 yen
One UK pound = 1.74 yen
The bottom line is that Japanese politicians are running out of ideas of how to drag the economy out of an 11-year recession.

The dire economic situation led to a vote of no confidence in President Yoshiro Mori - a vote which he survived.

The government and the Bank of Japan (BoJ) have limited policy options to fight concerns about deflation, since interest rates are already just 0.15% above zero.

And the BoJ is reported to have been in dispute with the government over how best the country can extract itself from the financial difficulties.

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See also:

19 Jan 01 | Business
Japan wavers on weak yen
20 Feb 01 | Business
Tech slump spreads to Japan
09 Feb 01 | Business
Japan cuts interest rate
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