(Adds quotes, details on spending plans, background)
By Tetsushi Kajimoto and Yoshifumi Takemoto
TOKYO, May 2 (Reuters) - Banking sector problems in the
United States and Europe were caused by liquidity and interest
rates risks, but won't impact on Japan's economy and financial
system for now, Economy Minister Shigeyuki Goto said on Tuesday.
Goto spoke to Reuters in an interview after U.S. regulators
seized First Republic Bank and sold its assets to
JPMorgan Chase & Co , in a deal to resolve the largest
U.S. bank failure since the 2008 financial crisis and draw a
line under a lingering banking turmoil.
"What happened to the West involved risks of liquidity and
interest rates. Financial institutions and authorities will need
to respond firmly to liquidity risks," Goto said.
"I don't see the U.S. financial sector facing big problems."
Asked if the U.S. banking woes may cause a delay in any Bank
of Japan efforts to normalise its easing policy down the road,
Goto said he expected the central bank to steer policy flexibly
and appropriately, without elaborating further.
Risk factors warrant attention such as downward any revision
to forecasts for the world economy and financial market
fluctuations as Western countries continue to tighten monetary
policy, he added.
"The BOJ as central bank should tackle monetary policy
operations, but I don't see the current financial situation
impacting Japan's economy and financial sector as a whole.
"I expect the BOJ to guide monetary policy flexibly, meaning
that the central bank should do so appropriately taking economy
and financial markets into account."
On Friday, the BOJ kept ultra-low interest rates but
announced a plan to review its past monetary policy moves,
laying the groundwork for new Governor Kazuo Ueda to gradually
phase out his predecessor's massive stimulus programme.
Japan plans to double military spending over the coming
three years to counter threats from China and North Korea as
well as double childcare spending as it seeks to reverse
dwindling birth rates.
However, the government is struggling to secure
permanent sources of funding for the boost in spending, which
will further strain the industrial world's heaviest debt that
tops 250% of Japan's annual economic output.
Goto said it would be difficult to tap sales tax revenue
as a funding source to pay for additional childcare spending
given the fragile state of the Japanese economy.
As the first step to rein in snowballing debt, Goto said the
government will stick to its aim of balancing the country's
primary budget excluding new bond sales and debt servicing costs
by the fiscal year-end in March 2026, a target he described as
"not easy".
(Reporting by Tetsushi Kajimoto and Yoshifumi Takemoto; Editing
by Lincoln Feast.)
