TOKYO — The Bank of Japan said on Tuesday Washington may have to use public funds to bail out U.S. banks hit by the credit crisis as Tokyo joined European calls for the Group of Seven states to work together calm financial markets.
The collapse of a mortgage bubble has so starved some U.S. banks of capital that the government may have to step in if private investment does not work, said Masaaki Shirakawa, deputy governor and acting head of the central bank said before a G7 meeting this week.
“First of all, it should be efforts by the private sector. But if the efforts by the private sector are not enough, a public capital fund injection, among various options, may become necessary,” Mr. Shirakawa, the government nominee to head the BOJ, told a parliamentary hearing considering his candidacy.
European finance officials have been stepping up calls for G7 nations to act together to protect the global economy and prevent another credit crisis from infecting markets.
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“Using Japan's experience, I would like to give advice on what should be done for stability in the global economy as a person from the country that had already gone through this problem before,” Mr. Shirakawa told parliament.
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