7 December 2001, 09:41  Shiokawa - Govt may buy "war-bonds" if issued by the US

TOKYO (AFX-ASIA) - Finance Minister Masajuro Shiokawa said the government could possibly buy government bonds if they are issued by the US to fund its 'war against terrorism'. Taku Yamasaki, secretary general of the ruling Liberal Democratic Party, has raised the possibility of buying into such a bond issue. "Yamasaki's view is right," Shiokawa said at a regular briefing, noting that it would be difficult to buy foreign bonds if the market believed that Japan simply wanted to intervene to weaken its currency. "I worry that speculation would arise in the forex market that Japan is doing it for the purpose of aggressive market intervention," he said. "However, if any methods other than that are taken, I do not deny the possible purchase of foreign bonds," he added. Shiokawa said he would not discuss forex movements with US Treasury Undersecretary Kenneth Dam. "I want to discuss the two countries' bilateral economic outlook. But we will not talk about the foreign currency issue," he said. This morning's third quarter GDP figures improved on the previous quarter, Shiokawa said. "I am a bit relieved to hear the contraction in GDP was not as large as the previous quarter. The government needs to do the utmost to push for structural reforms, while focusing on economic stimulus measures," he added. The Japanese government has not yet decided to sell government-held Japan Tobacco shares, Shiokawa said, referring to a media report, adding that the collapse of construction firm Aoki will not hurt the financial system. "There will be no effects from the event on Japan's financial system or government fiscal policy." em/tb/jv

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