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'Mr. Yen' sees Japan economic rebound
February 2, 1999
By Edward Neilan
Special to World Tribune.com
TOKYO---The man they call "Mr. Yen" sees the Japanese economy rebounding
around the middle of this year and a genuine yen bloc emerging in about 10
years.
Eisuke Sakakibara, Vice Minister of Finance for International Affairs
and a leading proponent of boosting the use of the yen's status as a global
currency, says he doubts that the U.S. dollar will retain the dominance it
now has as the world's leading currency.
But he added that Japan will not increase the amount of euros in the
central bank's foreign exchange reserves anytime soon. "We do not have any
immediate intention of shifting our portfolio in foreign reserves,"he said.
Sakakibara turns 58 next month, slightly greying, and with a raspy laugh
which he invokes often.
One reason for his popularity is his sharp English-language delivery
of a high-substance, intellectual line.
There are only a handful of Japanese officials who can do this. There
are no Americans--as in "none"--who can deliver a world-class speech in
Japanese and then ad-lib answers from questions tossed by veteran
journalists.
Of course, "Mr Yen" has an "unfair" advantage. He was groomed from the
start to be an upper-echelon bureaucrat representing "Japanese
capitalism."
He joined the Ministry of Finance in 1965 and was shipped off to study
at the University of Pittsburgh and then earned a doctorate at the
University Michigan. Back to Japan briefly he was dispatched for a
four-year assignment at the International Monetary Fund (IMF) in
Washington.
Then back to Japan for a teaching assignment at the government's Saitama
University and then a teaching stint at Harvard. All this while continuing
his link to the Ministry of Finance.
He "grew up" in U.S. academic circles with names like Paul Krugman,
Stanley Fisher and Lawrence Summers.
Asia is a nice neighborhood in which to nurture a yen bloc.
Asia's top countries in terms of foreign exchange holdings are Japan
($213.04 billion, October, also first in the world), China, $145.02
billion, September), Taiwan ($90.34 billion, December), Hong Kong ($69.25
billion, September), Singapore ($68.03 billion, August), and South Korea
($48.77 billion, October).
The greater China--China, Taiwan, Hong Kong--total of $304.61 billion
would spell some leverage if Taiwan were a political part of China.
Japan's domination in Asia is shown in another set of figures, total
market capitalization.
The New York market shows $10,380 billion, with Tokyo next at $2,416
billion followed in Asia
by Hong Kong ($380 billion), Sydney $308 billion), Taipei ($244 billion),
China ($181 billion),
Singapore ($128 billion), Bombay ($121 billion), Kuala Lumpur ($101
billion) and Seoul ($82 billion).
Considering the length of time it took to fashion the euro, Japanese
opinion vaguely says "about 10 years" to form a yen bloc.
Addressing the Foreign Correspondents' Club of Japan in late January,
Sakakibara was cagey about the "yen bloc" idea.
"An excessively weak yen is not desirable as well as an excessively
strong yen," he said.
As one analyst put it, Japan would enjoy substantial benefits if a "yen
zone" was created in Asia.
For example, if yen-based trade increases, Japanese companies would be
less likely to lose profits due to fluctuating exchange rates. They would
know at the beginning of a deal the exact amount of
profit they could expect.
Sakakibara quoted American Daniel Yergin's pitch that the post-World
War II process was the battle between government and the marketplace, the
theme of Yergin's book "Commanding Heights."
"Is this really true? To me it is intellectually more satisfying to see
government and the market as complements rather than substitutes."
On the controversial issue of controls vs. absolute deference to market
forces, Sakakibara comes down on the side of some controls because "global
capitalism has turned out be inherently unstable."
There are four requirements:
First, there need to be some global rules and regulations.
Second, these common international rules need to be established both in
financial and trade areas.
Third, the coordination of policies should be done on the political
level as much as possible with "effective technocratic advice from domestic
and international bureaucracies."
Fourth, differences among national capitalist structures should be
recognized to achieve effective coordination. That's coordination, not
coercion.
Sakakihara, who is the only genuine celebrity in the Japanese
bureaucracy, says "What I aspire to in the 21st century is a global world
system that interconnects each region and country with their unique culture
and socioeconomic regime."
Edward Neilan (eneilan@crisscross.com) is a veteran journalist, based in Tokyo, who covers East Asia and writes weekly for World Tribune.com.
February 2, 1999
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