Date

Aug 12, 1997

Description

In this memorandum, Geithner briefs Summers for his upcoming meeting with Japanese Vice Minister of Finance Eisuke Sakakibara. The document provides a good overview of U.S. policy goals regarding Japan during Clinton’s first term and for his second term. Echoing points made in the April 1997 memorandum noted above, Geithner notes that recent data reveal problems with Tokyo’s strategy of relying on domestic demand to tackle economic problems. An attached paper says that the U.S. faces two major risks with Japan: a rising current account surplus that could spark political tensions in the face of closed Japanese markets; and spillover to the international financial system if the legal, regulatory and supervisory environment is not properly revised to deal with issues rooted in the “Big Bang” opening of Japanese markets to the world. In a portent of things to come, Thailand’s economic problems indicate the possible spread of economic ills beyond Japan; i.e., signs are emerging of what would become the Asian Economic Crisis of the late 1990s.

Source

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