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Crisis
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2001-07-11 22:17:00-04
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International Monetary Fund urges Japan to further ease Monetary Policy
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Although there may be a short-term fall in yen, IMF urges easing
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Although a short-term depreciation may occur in the value of the yen, the International Monetary Fund has urged that Japan ease monetary policy. IMF first deputy managing director Stanley Fischer speaking at a seminar organised by the IMF and the Japanese Finance Ministry, said, 'Expansionary monetary policy means providing more liquidity and that wopuld mean almost certainly driving down the yen.' Fischer is on his 'sayonara' tour of Asia, as he will quit his post as number 2 person at the IMF next month. Stressing that there is no magic to cure the Japanese economy he praised the commitment by the Koizumi government to push through fundamental economic reforms. The Bank of Japan has been under pressure to further loosen monetary policy to help prod the recessionary economy into growth. The central bank has raised reserves to the current account to five trillion yen from four trillion yen in an attempt to increase money market liquidity. Despite the pressure, the central bank has taken no further steps. The bank has argued that a move to ease monetary policy would not help the Japanese economy in its present condition. Corporations are reluctant to borrow money because there is little opportunity to invest and banks are unwilling to lend because they are scared of increasing already huge non-performing loans.
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