*
MOF, BOJ, bank regulator executives meet to discuss markets
*
Meeting held in times of market turbulence, last held in
Sept
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PM Kishida: Meeting confirms coordination between govt and
BOJ
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Japan policymakers brush aside risk of contagion
(Adds PM Kishida quote in paragraph 6-7)
By Leika Kihara and Tetsushi Kajimoto
TOKYO, March 17 (Reuters) - Japan's government must work
closely with the central bank and overseas authorities in the
wake of banking problems in the West, Japan's top financial
diplomat said on Friday, though adding that the Japanese economy
was stable.
Global financial markets, including Japan's, went on a
rollercoaster ride this week as fears of a banking crisis
gripped investors, but asset prices showed some signs of
steadying on Friday after a series of banking sector lifelines
bolstered confidence. "Risk aversion has been seen in financial markets," Masato
Kanda, vice finance minister for international affairs, told
reporters after a meeting with his counterparts from the banking
watchdog and the Bank of Japan to discuss the markets.
"It is important for the government and the Bank of Japan to
keep close coordination seamlessly to respond fully" to any
developments, he said.
The three-party talks were hastily arranged as banking
problems in the United States and Europe shook global markets.
Prime Minister Fumio Kishida said later that the talks were
held as part of government efforts to closely watch any impact
on financial system stability with "a strong sense of caution."
"We confirmed close coordination between the government and
the BOJ. With this stance, we will continue to watch carefully,"
Kishida told a news conference.
The global economy faces risks including the war in
Ukraine and a longer-than-expected period of high inflation,
which has prompted global central banks, except for Japan, to
tighten monetary policy.
Market turmoil after the collapse of Silicon Valley Bank
(SVB) and Signature Bank in the United States has
ensnared Credit Suisse in Europe, fuelling fears of
another global financial crisis.
Japanese policymakers have brushed aside the chance of
contagion in Japan, saying domestic banks had sufficient capital
buffers to absorb losses caused by various external factors
including risks from the collapse of the U.S. lenders.
"Japan's financial system remains stable as a whole,"
Kishida said.
Three-way meetings between the government, banking regulator
and central bank are usually in times of market turbulence and
typically signal policymaker alarm over price moves.
Such a meeting was last held in September, when expectations
of widening U.S. and Japanese interest rate differentials pushed
the yen down sharply.
Earlier on Friday, Finance Minister Shunichi Suzuki said the
government was closely coordinating with the central bank and
financial authorities overseas to prevent fallout from the
crisis of confidence hitting banks in the West.
Japan's benchmark Nikkei share average ended higher
on Friday but was still down nearly 3% for the week.
Ramping up investment to meet post-COVID-19 demand, orders
at service sector companies jumped 19.5% to a level last seen in
November 2019.
(Reporting by Tetsushi Kajimoto, Leika Kihara and Kantaro
Komiya; Editing by Muralikumar Anantharaman, Kim Coghill, Robert
Birsel and Christina Fincher)
