Japan ruling party lawmaker: G7 must share awareness of banking issues

By Tetsushi Kajimoto and Takaya Yamaguchi

TOKYO (Reuters) – The Group of Seven (G7) advanced economies must keep a close eye on U.S. banking problems although the recent failure of two mid-size U.S. banks is unlikely to have a direct impact on Japans financial system, a top ruling party lawmaker said on Thursday.

A crisis of confidence in Credit Suisse this week added to broader banking sector fears sparked by last weeks collapse of Silicon Valley Bank (SVB) and Signature Bank in the United States.

In Japan, expectations of a strong post-COVID recovery are quickly fading amid global monetary tightening and the worries about banks worldwide.

“If the global economic slowdown intensifies, the G7 must share awareness of banking issues,” said senior Komeito party member of parliament Isamu Ueda, who heads a financial panel in the party, part of the ruling coalition.

“We need to carefully watch developments from now on,” Ueda told Reuters, while echoing cautiously optimistic views of Japanese policymakers.

More than a decade ago, the collapse of U.S. investment bank Lehman Brothers quickly snowballed into the 2008/09 global financial crisis.

Leaders of the G7, which is under the chairmanship of Japan this year, will gather in the western Japanese city of Hiroshima for a summit in May. The G7 groups Britain, Canada, France, Germany, Italy, Japan and the United States.

Ueda attended Bank of Japans policy reviews as deputy finance minister about two decades ago and debated monetary policy with the incoming BOJ governor, Kazuo Ueda, when the latter served as a central bank board member.

“His explanation on monetary policy is easy to understand and I had an impression that his communication ability is high,” said Isamu Ueda, who is not related to the new central bank governor.

“His basic stance is to continue large-scale easing for the time being, although he may probably respond flexibly to markets as needed,” the lawmaker said.

(Reporting by Tetsushi Kajimoto and Takaya Yamaguchi; Editing by Bernadette Baum, Robert Birsel)