Magazine article American Banker

Japan's Hesitant Liberalization Pace

Magazine article American Banker

Japan's Hesitant Liberalization Pace

Article excerpt

ZURICH -- Japan is not moving far enough or fast enough in its liberalization of its financial markets, and is thus frustrating the United States, which would like to see such a liberalization result in a strong yen, according to the Union Bank of Switzerland.

As a result of this hesitancy on the part of Japanese financial authorities, fresh confrontations on the international trade front are inevitable, because Washington's desire to see the yen established as a stronger international currency will not occur, Union Bank's publication, Foreign Exchange News, reported in a special issue.

Assistant editor Renato Beckman admitted, however, that there has been considerable progress in the deregulation of the Japanese financial system, even though it has not gone as far as the United States would like.

"On the Euromarkets, in particular, the yen can be said to have reached a degree of freedom which has no longer to fear comparison with other Eurocurrencies," Beckman said. "On the other hand, the transition to an unregulated interest rate formation in Japan as well as the admission of foreign competitors to the Japanese financial market is undoubtedly proceeding at an extremely hesitant pace."

Union Bank was one of two Swiss banks recently granted a license to operate in the lucrative Japanese pension fund market, after the Swiss government had told Tokyo that Japanese financial houses operating in Switzerland faced restrictions unless there was reciprocity.

Liberalization of Japanese financial markets will be slow because there is considerable resistance in Japan to any change, the study said. …

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