*
C.banks responded to risk-aversive moves in markets -
Matsuno
*
Japan's banking system stable as a whole - Matsuno
*
Finmin says will keep assessing impact of Credit Suisse
buyout
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Market rout may complicate BOJ's exit path from easy
policy
(Changes key words for media clients from JAPAN-ECONOMY/BANKS
previously, adds market moves in paragraphs 6, 11)
By Leika Kihara and Tetsushi Kajimoto
TOKYO, March 20 (Reuters) - Japan's top government
spokesperson said on Monday the banking system was stable,
seeking to reassure markets the country won't see a contagion
from U.S. and European banking sector woes.
Chief Cabinet Secretary Hirokazu Matsuno also welcomed
Sunday's decision by top central banks, including the Bank of
Japan (BOJ), to bolster the global flow of cash by expanding an
existing swap line to ensure lenders have sufficient dollars
needed to operate.
"Each country promptly ramped up efforts as risk-aversive
moves were seen in financial markets," Matsuno told a regular
news conference.
"Japan's financial system is stable as a whole," he said,
adding that authorities were watching financial market moves
"with a strong sense of alarm".
The remarks came after Finance Minister Shunichi Suzuki told
reporters on Monday the government would continue to "carefully
assess" how a weekend rescue deal for Credit Suisse Group would
affect Japan's financial sector.
Asian stocks struggled to stabilise on Monday as a weekend
rescue deal for Credit Suisse and concerted central
bank action offered little lasting respite from fears a bigger
banking crisis is brewing.
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 U.S. lenders.
But the global market rout complicates incoming BOJ Governor
Kazuo Ueda's task of steering a smooth exit from ultra-low
interest rates that have drawn increasing criticism for pushing
financial institutions to take on risk in the search for yield.
The BOJ board debated the side-effects of easy policy in
March, even as it decided to maintain ultra-low rates, a summary
of opinions at the meeting showed on Monday.
In a sign calm was being restored in markets, the BOJ's
market operation to offer dollars - the first to be conducted
since Sunday's central bank announcement - drew no bids on
Monday.
Demand for safe-haven debt pushed the yield on the
10-year Japanese government bond (JGB) down 1.5
basis points to 0.255% on Monday, well off the BOJ's 0.5% cap
that had been under attack before the banking sector crisis
erupted.
For now, financial authorities in Tokyo see the most likely
risk for Japan coming from a deterioration in the U.S. economy
that would hurt exports, rather than a direct bank contagion.
"The market turbulence could dampen business sentiment and
cloud Japan's economic outlook," said one of the officials, a
view echoed by another official. Both spoke on condition of
anonymity due to the sensitivity of the matter.
Some government officials were not letting their guard down.
"The failure of two U.S. banks spilled over to a Swiss bank
in a seemingly unrelated way," one official said. "There's a lot
of unknowns on how things are spreading, so we'll need to gather
data and monitor the situation," the official said.
(Reporting by Leika Kihara and Tetsushi Kajimoto; Additional
reporting by Ritsuko Shimizu, Kentaro Sugiyama and Yoshifumi
Takemoto; Editing by Tom Hogue and Jacqueline Wong)
