Japan, Germany agree to work closely on financial jitters

The worries stem from recent problems at Silicon Valley Bank and Credit Suisse.

TOKYO: Japan and Germany agreed today to coordinate closely on financial jitters stemming from problems among western banks while carefully monitoring global markets and economy, a Japanese finance ministry official told Reuters.

The agreement came in a 45-minute meeting between Japanese finance minister Shunichi Suzuki and German finance minister Christian Lindner, visiting Tokyo for bilateral government consultations.

Banking stocks globally have been battered since Silicon Valley Bank collapsed and Credit Suisse was forced to tap US$54 billion in central bank funding, raising questions about other weaknesses in the financial system.

The ministers were meeting as German chancellor Olaf Scholz and Japanese prime minister Fumio Kishida kicked off their first government consultation involving multiple cabinet members from both countries, to discuss ways to secure economic security.

“Risk aversion has been seen in financial markets. We will carefully watch developments and coordinate with the central bank and overseas authorities,” Suzuki told Lindner, according to the Japanese official.

“Japan’s financial system remains stable as a whole.”

Both sides agreed on the need to closely monitor financial developments and coordinate as needed, the official said, without elaborating further.

Japan succeeded Germany this year as chair of the G7 industrial powers, a group that also includes Britain, Canada, France, Italy and the US.

Suzuki and Lindner agreed to prioritise sanctions against Russia over its invasion of Ukraine and support for Kyiv, while striving to reach agreement on global digital taxation and implement it, and steadily resolve developing countries’ debt in line a G20 framework, the official said.

They agreed on the need to strengthen supply chains as an element of economic security.