* Peripheral Europe nations must boost
* Adds inflexible FX may trigger abrupt capital flows
* Japan's financial system stable and resilient
By Braden Reddall
SAN FRANCISCO, June 11 Bank of Japan Governor
Masaaki Shirakawa on Monday called for exchange-rate flexibility
in major Asian economies, warning that a lack of this may
trigger abrupt shifts in capital flows.
Shirakawa also said a solution to Europe's debt problem
ultimately rests with the ability and efforts of peripheral
countries to boost productivity and growth.
In a conference held by the San Francisco Federal Reserve,
Shirakawa said Asia's economic fundamentals are relatively
strong and welcomed recent efforts by some nations in the region
to enhance exchange-rate flexibility.
"It is ... imperative that each influential economy maintain
sufficient exchange rate flexibility," Shirakawa said in the
conference on Asia's role in challenges on global finance, which
he joined through a live video link from Tokyo.
"Under economic and financial globalization, inflexibility
of exchange rates may trigger abrupt changes in international
capital flows and increase the burden of monetary and prudential
policies," he added.
Shirakawa did not touch on Japanese monetary policy but said
the country's financial system has been stable and resilient.
"Given that Japan experienced a financial crisis in 1990s,
various measures have already been taken to strengthen its
financial system," he said.
"Partly due to such efforts, Japan's financial system has
remained mostly stable, surviving successive events such as the
failures of Lehman Brothers and other financial institutions,
the Great East Japan Earthquake and the European debt problem."
The BOJ is expected to keep its monetary policy unchanged on
Friday, saving its financial firepower in case Greece ignites
fresh turmoil after the market respite offered by a euro zone
agreement to shore up Spain's banks.