Japan warns Rubin over yen

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The Independent Online
A senior Japanese politician yesterday said he had urged the government to protest about remarks made by Robert Rubin, U.S. Treasury Secretary (pictured) which he claimed contributed to the yen's fall last week. Taku Yamasaki, chief policymaker for the ruling Liberal Democratic Party, said: "Secretary Rubin's comments caused the yen to further depreciate. We need to strongly protest."

On Thursday, Rubin told the Senate Finance Committee that market intervention to boost the yen would be only a "temporary tool". He added: "The weakness of the yen reflects the economic conditions in Japan, and can only be remedied by restoring economic strength in Japan.".

Yamasaki said the most urgent task for policymakers was to help liquidate bad loans held by Japanese financial institutions. He said he hoped the government and LDP would have bad loan disposal legislation prepared in time for an extraordinary session of parliament, to follow upper house elections on July 12. He called for the session to be convened by the end of July. Yamasaki said the idea of a state-owned "bridge bank" to take over the assets of failed banks would be one proposal to consider. The proposal involves allowing the Resolution and Collection Bank, now responsible for recovering loans extended by failed institutions, to make fresh loans to healthy borrowers.