Date

Apr 27, 1997

Description

In this memorandum, Geithner briefs Rubin and Summers on the main issues for the upcoming meeting with Japanese Finance Minister Mitsuzuka. The list of American concerns (which sound oddly familiar in light of more recent and widespread economic and financial woes) includes Japan’s economic future, banking system, financial reform, and anti-corruption efforts. For example, the U.S. fears that Japan’s banking system is being weakened by the overhang of bad loans and so was vulnerable to another economic downturn. Geithner also advises Rubin and Summers to continue pressing Tokyo on financial reform and deregulation to create opportunities for foreign business, while improving transparency and disclosure measures to reduce risk for foreign investors. The U.S. had a clear interest in the success of the “Big Bang” financial reforms, as U.S. firms would benefit from the greater ability to market new products and services in Japan, the relaxation of foreign exchange controls, deregulation of asset management and the expanded use of derivatives (though in hindsight the latter may not have been so wise, given the role of risky derivatives in creating the more recent economic crisis).

Source

Japan and the United States: Diplomatic, Security, and Economic Relations, Part III, 1961-2000