Saturday, October 12, 2013
DJ: Japanese Emphasize Importance of U.S. Resolving Debt Impasse
WASHINGTON--Japan is monitoring U.S. efforts to end a fiscal impasse with much caution, after a meeting of finance chiefs from the Group of 20 major economies adopted a joint statement Friday calling for urgent action by the U.S., Japanese officials said in a press conference.
Negotiations are still under way between the White House and the congressional Republicans on resolving the fiscal impasse over the budget and the debt ceiling. But Japanese officials said there are fears that such a crisis might be repeated even if the current dispute is resolved.
"What really matters is how this issue will be settled," said Japanese Finance Minister Taro Aso in a press conference after the G20 meeting.
There are growing hopes that the White House and the House Republicans will reach an agreement on a government budget for the new fiscal year and its funding. Of particular concern is the fact that the U.S. could become unable to serve its debt if no agreement is reached on raising the government's ability to borrow money by Oct. 17.
The G20 statement said that "the U.S. needs to take urgent action to address short-term uncertainties."
Japanese officials stressed that the G20 isn't just seeking a temporary solution, but acknowledged that there's very little other countries can do on the issue, which is largely a matter for the U.S. Congress to resolve.
Asked about whether he was feeling any better after talking with U.S. officials in Washington, Mr. Aso said that he remains cautious about the situation.
"A default by the U.S. government isn't like a closure of a national park. The situation needs to be monitored with great caution," he said.
Mr. Aso repeated that this is not just an issue for the U.S., but for the rest of the world.
"U.S. Treasurys, a triple-A rated IOU, make up part of the assets of commercial banks that operate under the supervision of central banks. A collapse of the Treasury market would obviously have a serious impact on the central banks," Mr. Aso said.
Meanwhile, Bank of Japan Gov. Haruhiko Kuroda, who attended the press conference with Mr. Aso, said that G20 didn't discuss any contingency plans for a possible U.S. default. "We didn't have such discussions as far as I remember," Mr. Kuroda said.
Mr. Kuroda stressed that the BOJ would continue to accept U.S. Treasurys as collateral in its liquidity supply operations, despite the possibility of a technical default.
"We have accepted U.S. Treasurys as foreign currency-denominated collateral. We have no change to that policy," Mr. Kuroda said.