BOJ Shirakawa:Europe debt woes remain biggest risk

TOKYO Jan 16 (Reuters) - Bank of Japan Governor Masaaki Shirakawa said on Monday that Europe's sovereign debt crisis remains the biggest risk to Japan's economy, although the country's financial system remains stable as a whole.

"Japanese financial institutions are not facing any problems in procuring funds but we must continue to carefully watch for risks to Japan's financial system, such as the fallout from Europe's sovereign debt problems," Shirakawa said in a speech delivered at a quarterly meeting of the central bank's regional branch managers.

The BOJ kept monetary settings unchanged last month but cut its economic assessment and acknowledged that growth will stall at least until spring this year.

The central bank stands ready to offer further monetary stimulus if Japan's recovery prospects are threatened, but is expected to stand pat again at its rate review next week unless Europe's debt crisis destabilises markets and sparks a renewed sharp yen rise.