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Last Updated:  Thursday, 20 March, 2003, 07:06 GMT
Baptism of fire for bank boss
BoJ Governor Toshihiko Fukui
Fukui is thought to be a conservative force
Japan's central bank chief has started his first day on the job just as a massive push is prepared to prop up the finances of the country's banks.

Taking office as US missiles began to fall on Baghdad, the new Bank of Japan governor Toshihiko Fukui walked straight into a meeting of a special committee to work out what the war might do to Japan's fragile economy.

As well as "closely monitoring" developments, the central bank plans to inject 1 trillion yen into the economy by buying up government bonds.

The action echoed moves by governments and banks across Asia to reassure their markets, amid fears that economic growth will crumble if exports to the US and elsewhere are hit by the uncertainty surrounding military action.

In Seoul, the South Korean central bank said it would not cut interest rates, but would buy up bonds to help banks and credit card companies still in turmoil after last week's massive accounting scandal at SK Group.

Wash and brush up

March is traditionally the time when the public and private sector in Japan colludes to make sure that corporate finances look as good as possible for the end of the financial year on 31 March.

That task has proved particularly difficult this year, in the wake of government promises - admittedly largely unfulfilled - of radical reform to tackle more than a decade of economic stagnation.

But the international crisis has given legislators from Japan's ruling party a cue to bring forward measures they hope will make life easier for companies whose balance sheets have been hammered by stock markets falling to 20-year lows.

After a meeting of the ruling coalition, officials from the dominant Liberal Democratic Party said they had agreed to drop plans to force companies to price their assets at market value.

The plan to require so-called "mark-to-market" valuations had been intended to force companies to come clean about the real state of their finances. The government hoped that this would encourage reform and speed up the business of cleaning up the hundreds of trillions of yen in bad debts crippling the banking system.

But now, LDP official Hideyuki Aizawa told reporters, firms could choose whether to keep their "book-value" asset valuations - the price they paid for them - or to switch to the more realistic market price.

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