YIES / Financial crisis ‘calls for stable growth’

Written by Meenaa on Wednesday, November 19th, 2008

OSAKA–The global financial crisis can be seen as the market’s way of encouraging countries to reconsider whether the global economy’s recent high growth rate was sustainable and urging them to seek more balanced, stable growth, former Bank of Japan Gov. Toshihiko Fukui said Tuesday in Osaka.

Explaining that the global economy’s annual growth rate stood at around 5 percent between fiscal 2004 and 2007, Fukui said rising crude oil prices could have been taken as a warning that such a rate could not be maintained. “Although the financial turmoil started from the subprime mortgage loan crisis in the United States, it’s not just about the housing investment. [The crisis] is a sign urging the world to adjust the current financial system,” he said.

During a meeting of the Yomiuri International Economic Society held at an Osaka hotel, Fukui emphasized the need for all countries, including Japan, to remain alert in regard to the crisis and send a strong message to the market.

“Sufficient measures–which must be consistent across the world–need to be taken in time. Also, care should be taken so that the measures don’t contradict future economic adjustments or contain risks that can create a moral hazard,” he added.

Fukui said it was important to develop financial innovations and take necessary risk management measures for the future.
(Nov. 19, 2008)