BBC News Online: Despatches

Land of the falling yen worries world's bankers

Finance ministers from around the world are meeting at the headquarters of the International Monetary Fund in Washington. They have before them an agenda dominated by events in Asia and their fall-out. The BBC economics correspondent, James Morgan, looks ahead.

The problems of Japan have added an unpleasant twist to the the East Asian financial crisis. That might seem a good deal less intractable had Japan not become part of the problem rather than the solution.

Much of the discussion in Washington will centre on Tokyo's latest economic stimulus programme and the tax cuts. Even if they ensure the economy grows by one percent rather than declines by three next year, Japan will clearly not act as the locomotive dragging its neighbours out of the mire.

Even more attention will be focussed on the lessons to be drawn from the financial crisis. The United States Treasury Secretary Robert Rubin, speaks of changing the architecture of the international financial system.

What this means is devising systems to stop sudden financial panics of the kind we saw break out last July in Thailand and two-and-a-half years earlier in Mexico. Some argue that these crises mean more controls on financial flows are needed.

But the orthodox view is that liberalisation remains a key to improved economic performance. What is needed, it is said, is more transparency so that banks can see that they and others aremaking excessive loans to developing countries.

And there will be some debate as to how those banks which do make poor lending decisions can be punished for their foolishness and not rely on being bailed out by an IMF rescue.

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