WASHINGTON – Japanese Prime Minister Taro Aso is urging China and other wealthy nations to help the International Monetary Fund support nations reeling from the global financial crisis.
Speaking ahead of Saturday's gathering of 20 of the world's biggest developed and developing economies, Aso said the IMF needs more than the approximately $200 billion it has to help struggling countries. Aso earlier announced that Japan was ready to lend up to $100 billion to the IMF.
"It doesn't have to be Japan alone that would provide such funds," Aso said in an interview Friday with The Washington Post. "Oil-producing countries, China and other countries that have ample reserves could also make their contributions."
Aso has been meeting with leaders at this weekend's gathering of 20 nations working to confront global economic turmoil, sharing what he believes are valuable lessons from Japan's efforts to recover from its own financial crisis in the 1990s, Japanese spokesman Kazuo Kodama told reporters.
During that decade, the world's second-largest economy was strongly criticized for doing too little to improve its banking sector's health after a stock and real estate bubble burst. Aso's message at the summit is that banks must quickly and fully disclose their non-performing loans and remove them from their balance sheets, Kodama said.
Leaders have "no luxury to engage in blame games," Kodama said, but they should engage in "candid soul-searching on why this happened."
European officials at the extraordinary summit in the U.S. capital said a draft agreement among world leaders likely would call for intensified government efforts at bolstering national economies, cooperation on international regulation of the financial system and reform of global structures to aide needy developing countries.
Kodama said the IMF and World Bank's governance structures should be reviewed to reflect better the chaniging nature of the world economy.
Japan has almost $1 trillion in foreign currency reserves, and officials in Tokyo have repeatedly said Japan was ready to provide the IMF with money for rescue packages. The Washington-based IMF has dipped into its reserves to provide emergency loans to Iceland, Hungary and Ukraine worth more than $30 billion.
Financial recovery efforts in Japan have contributed to an environment of more profitable lending; many banks have merged to face global competition, after years of writing off mountains of non-performing loans that piled up after the bubble burst in the early 1990s.
Kodama, in outlining Aso's position on the economic crisis, said that providing public funds for banks also would help resolve the problem of non-performing loans. He said the world should also "be making efforts to support the dollar-based currency system, on which the current international economic and financial systems rely."
Meanwhile, the finance ministers of China, South Korea and Japan have agreed that their countries "should play a pivotal role in maintaining economic and financial stability in the region," according to a joint statement released after their meeting.
They recognized the need to boost financial cooperation and agreed to explore an "increase in the size of bilateral currency swap arrangements" among the countries.
Top finance officials from the countries will hold a financial stability workshop in Tokyo on Nov. 26.