TOKYO Oct 13 The following are comments on
Saturday from finance officials in Tokyo for the semiannual
meetings of the International Monetary Fund and World Bank.
JAPAN FINANCE MINISTER KORIKI JOJIMA
On ESM bonds:
"During a bilateral meeting, France's (Finance Minister
Pierre) Moscovici expressed gratitude for Japan's purchase of
EFSF (European Financial Stability Facility) bonds, as this has
contributed to financial stability in Europe. He told me that he
expected Japan would continue to support and purchase ESM
(European Stability Mechanism) bonds.
"I told him that we would consider purchasing ESM bonds from
the standpoint of the need for Europe's financial stability and
efficient management of our foreign reserves special account,
while examining the creditworthiness of ESM bonds and Europe's
On the IMF meetings:
"It's true that there are downside risks but I feel that the
atmosphere of the meetings was not that pessimistic even though
it was not optimistic. Participants were debating in a
forward-looking manner in order to overcome the current
difficulty and to create bright prospects for the future."
"Japan and China must communicate with a comprehensive
perspective. The substance of the discussions at the meetings
was not affected by the absence of top officials, but of course
it would've been better if they had come. As for diplomatic
issues, we need to discuss from a broad perspective if there are
opportunities to do so."
On Japan's economy:
"If downside risks subside, including the instability of the
financial market and global economic slowdown due to the
European sovereign debt crisis, we expect that Japan's GDP will
grow about 2 percent in fiscal 2012."
"While we must keep a careful watch on the risk of the U.S.
fiscal cliff, the greatest cause of concern is the debt and
financial-sector problems in Europe. The negative spillover
effects of such problems are starting to spread beyond Europe."
"Europe needs to quickly implement all of the measures that
have been agreed upon and announced to date."
FRANCE FINANCE MINISTER PIERRE MOSCOVICI
On Greek budget targets:
"On Greece, there is a process that has started. The troika
is in Greece. We have seen that Greece was making important
"I think that everybody understands today the contagion risk
that would entail an exit of Greece from the euro zone. If the
troika reaches a deal with Greece on reforms, and if there is
strong monitoring, then this would constitute a structural
solution and we would be in a position to address this issue.
But we could answer positively to (such a demand)."
On potential Spanish aid request:
"This is a sovereign decision ... Europe, if the moment
comes, would be in a position to answer to a Spanish aid
request. We want these (Greek and Spanish) situations to find a
suitable and stable resolution in the next few weeks. It is
possible to move quickly. We're working on it."
SWISS NATIONAL BANK CHAIRMAN THOMAS JORDAN
"We were in a situation three months ago when uncertainty
peaked. The situation has significantly improved, and (the ECB
bond purchase programme) has contributed significantly, but this
window of opportunity must be seized."
On the franc:
"The monetary policy with a currency cap is the right
monetary policy for now. We will also pursue this policy with
full determination in future. The franc remains ... with a value
in the region of 1.20 (to the euro) a very strong currency. You
could call it an overvalued currency if you wanted."
"Market sentiment has improved (since the ECB announcement
of potential bond purchases), and that has taken some pressure
off the franc."
BANK OF JAPAN GOVERNOR MASAAKI SHIRAKAWA
On the yen and Japan's monetary easing:
"Europe is faced with a lot of uncertainty and this
uncertainty created safe-haven flows. That's why the yen and the
Swiss franc appreciated. This affected (the) corporate mind and
exporters, which is why we strengthened monetary easing."
"The BOJ is taking into consideration the effect of yen
appreciation on the economy and price developments. Especially
after the European debt crisis, the yen tended to appreciate
because of its save-haven status. To the extent that uncertainty
is created, the yen tends to appreciate.
"This appreciation of the yen is affecting the sentiment and
profits of exporters. But this is one of the elements that
affect the economy. We're not looking at exchange rates alone,
we're looking at various data, and one ... is exchange rates.
The yen's appreciation is affecting Japan's economy and that's
why the BOJ has been easing in the past few years."
RUSSIAN FINANCE MINISTER ANTON SILUANOV
"There's a general condition of uncertainty, of tension (in
the economy). The main cause is the high debt of developed
nations - as it was, it still is. ... So there are no positive
factors for us to focus on."
"We also worry about the unknown situation with liquidity
(quantitative easing)... Everything is getting done, from my
perspective, blindly, without regard to the consequences it
"For now, this excess liquidity is not contributing to
inflation, but it could happen at some point ... and it could be
a very serious situation."
On Europe and the pace of reforms:
"You could compare manipulating the economy to a
supertanker. If you decide to turn it in one direction, it
happens very slowly. Europe has the additional problem of having
17 captains. So any decision to change course has to be
discussed with everyone."
IMF MANAGING DIRECTOR CHRISTINE LAGARDE
On fiscal adjustments:
"There has been a lot of attention in the last few days to
the issue of fiscal adjustment. In reality, what sometimes has
been presented as disagreement is more about perception than
"We all recognise that credible, medium-term fiscal
adjustments are necessary in all advanced economies. The pace
and type of measures obviously need to be calibrated on a
"We might not always agree on everything, but i think there
is a general consensus that collective action is going to
On economic stagnation:
"It has been going on for a little while and it's not the
end of it ... Advanced economies have to do quite a lot of work,
fiscal consolidation, structural reforms, making sure they sort
out their health in many ways.
"The emerging market economies are slowing down, but they
certainly have a lot of potential ahead ... A lot of the heavy
duty work lies at the advanced economies at the moment. It's for
advanced economies to do a lot now."
ECB PRESIDENT MARIO DRAGHI
On ECB bank supervision:
"It is very important that the ... regulation enters into
force on January 1, 2013, but that does not mean that the
supervision will be in place from January 1 from an operational
point of view."
"It is very important that we have this institutional step
done by January 1, so we can prepare ourselves to run the
supervision and make it operational, but this may well take
another year. We think that by January 2014 the new framework
will be in place and operational."
On the euro zone economy:
"The situation remains challenging but there are signs of
prudent optimism. It remains challenging because if you look at
growth the first quarter was zero, the second quarter was -0.2
percent, third quarter looks poised to be weak and very likely
the economic activity will bottom out at a low level ... and the
recovery next year will be slow and sluggish.
"On the inflation front the risks are broadly balanced."
On reasons for optimism on the euro zone's crisis:
"First is the degree of the fiscal response by all countries
concerned, especially what we call vulnerable countries, has
been very significant, especially when we compare this response
with what's happening in other parts of the world, namely in the
U.S. and the UK..."
"The second reason for being relatively positive is that the
European banks have shown to be pretty resilient. The most
recent figures ... show that the euro area banks have raised
some 200 billion euros of capital, so recapitalisation is making
progress. Also the leverage ratio has gone down and all in all
the credit flows for the average of the area are about the same
as they were in 2008."
"Third reason for being positive is that if we compare the
governance of the euro area with what it was until, I would say,
six months ago, an enormous progress has been achieved
especially starting after the June summit."
"Finally, in the last three months financial markets seem to
be less volatile -- this is probably also due to new measures
announced by the (ECB) Governing Council, the OMT, but also
because the progress at the national level and the European
level is being acknowledged."
AUSTRALIA TREASURER WAYNE SWAN
On Europe and United States:
"It was reassuring that European colleagues outlined their
programme of reform. But I think from my perspective it will be
good to see that happen as quickly as possible because the
recession in Europe as well as very tepid growth in the United
States is putting pressure on growth elsewhere in the global
economy, including in my region of Asia."
"I don't think anybody underestimates the challenges that
we've got in the global economy, and I think what's most
important is that people are reassured that the steps that are
being taken in Europe as well as in the United States will lead
to strengthening of growth elsewhere in the global economy."
IMF STEERING COMMITTEE STATEMENT
"Global growth has decelerated and substantial uncertainties
and downside risks remain.
"Key policy steps have been announced, but effective and
timely implementation is critical to rebuild confidence. We need
to act decisively to break negative feedback loops and restore
the global economy to a path of strong, sustainable and balanced
"Advanced economies should deliver the necessary structural
reforms and implement credible fiscal plans. Emerging market
economies should preserve or use policy flexibility as
appropriate to facilitate a response to adverse shocks and
IMF STEERING COMMITTEE CHAIRMAN THARMAN SHANMUGARATNAM
"IMFC members all agree that we are in a better position
than we were six months ago, a better position with regard to
the policy footing, of getting (growth) started and achieving
fiscal consolidation in the advanced economies ... We're in a
better position as far as our policy footing is concerned."
GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE
On overcoming debt crisis:
"The main obstacle is you have to find solutions between
European institutions and 17 national governments and most of
these government's need approval of parliament in advance ...
It's not fit for markets, that's true, but if we are not fast
enough for markets, sorry but markets have to wait."
On looking over the medium- to long-term
"At this meeting the view has been strengthened that,
especially for the advanced countries, sustainable growth is
more important than short-sighted manipulation."
"We did agree that, in the mid-term, reduction of debt is
"You can be flexible on the first debt-reduction steps, but
even when the way is a long one, you must not artificially
change direction ... These remarks have nothing to do with the
CHINA CENTRAL BANK DEPUTY GOVERNOR YI GANG
On China's economic policy:
"In the face of uncertainty in the global recovery, China
will continue to implement proactive fiscal policy and prudent
monetary policy, with pre-emptive and flexible policy
"The Chinese economy is expected to maintain steady growth
in the second half of the year and to continue to sustain its
relatively strong growth momentum in the medium and long term."
EU ECONOMIC AND MONETARY AFFAIRS COMMISSIONER OLLI REHN
On economic outlook:
"Our central scenario remains that of a mild recession in
2012, followed by a subdued recovery in both the EU and euro
area. In 2013, moderate economic growth is expected, but the
weaker second half of this year implies that a sizeable negative
carry-over into 2013 will first have to be worked out."
On fiscal policies:
"As the global economic situation seems to be losing
momentum again, should macroeconomic conditions deteriorate
further, member states with more fiscal space should let the
automatic stabilizers play along the adjustment path assessed in
structural terms and stand ready to review the pace of
consolidation. In this connection, the composition of government
expenditure and revenues should reflect the growth impact of
spending items and revenue sources. In particular, available
budgetary margins should be used to foster public investment in
the euro area. However, given their particular situation, member
states benefiting from a financial assistance programme should
stick to the targets as agreed in the programme and should fully
and timely implement the policy measures, including in
particular structural reforms, agreed in the respective
Memorandum of Understanding."
U.S. TREASURY SECRETARY TIMOTHY GEITHNER
On global economy:
"Although the world economy is expanding and progress has
been made since the peak of the crisis, we still face a
complicated mix of challenges to achieving stronger global
"Europe is making progress on outlining a road map toward
banking union, which is a critical step to ensuring a
sustainable long-term framework. This broad framework offers a
more promising strategy for addressing the crisis. However, what
is important is how it will be applied in practice."
"As China's slowdown in response to weak export demand
highlights, domestic consumption still does not play a
sufficient role in driving China's economy. Progress toward
strengthening domestic demand will be good for China, and good
for the global economy."