Japan nears economy plan :: essays papers

Japan nears economy plan TOKYO (Reuters) - Japanese policymakers drew closer Tuesday to an agreement on measures to remove two long-standing obstacles to an economic recovery -- banks' mountainous bad loans and stock market weakness. The ruling coalition government is expected to finalize by Wednesday a package centering on steps to help banks dispose of their non-performing loans and a special fund to absorb sales of shares held by banks. While the deadline was self-imposed and officials have been reluctant to guarantee it would be met, at stake is the credibility of political and financial leaders who have been unable to pull the nation out of economic doldrums for a decade. The country's benchmark Nikkei share price average, which shot up more than 3 percent at one point Tuesday on optimism about the economic package, risks a retreat towards last month's 16-year lows if no credible deal is reached. One key point of contention has been whether taxpayers' money should be used by a proposed fund to buy sha res from banks. The Financial Services Agency (FSA), Japan's financial regulator, had been reluctant to channel public funds into the body, saying government intervention in the market should be as limited as possible. But a member of the coalition panel studying the issue said the gap was narrowing. "The FSA seemed to have leaned closer toward us, although there are still some differences," he told reporters. The coalition has changed the name of the proposed body to "a fund to acquire banks' shareholdings" from a more crude "stock-buying fund," specifying that the aim was to help banks unload massive shareholdings, losses in which are squeezing their capital adequacy ratios and throttling lending. The banks have built up huge portfolios of shares in group companies and their clients as a means to cement business ties, but the drop in Japanese share prices over the last decade has brought calls to limit banks' shareholdings. The Nihon Keizai Shimbun financial daily reported earli er this week that  ¥15 trillion, or $119 billion, of funds from the state-backed banking safety net, the Deposit Insurance Corp., could be channeled to the proposed stock-buying body. The government is scheduled to hold a meeting of its emergency task force on economic measures Wednesday morning if agreement can be reached with the ruling coalition parties on Tuesday, an LDP official said. Copyright  © 2001, CNN America, INC.