Keidanren
September 11, 1995
However, the threat of unemployment in Japan limits the impact of such initiatives. There is an urgent need to correct the imbalance in the foreign currency supply and demand, which results from the imbalance the current account balance and the capital account balance. Put together they drive yen up high. Japan must first reduce its current account surplus, and recycle it by encouraging overseas investments and loans. The Government must also use timely intervention and other measures to correct the differential between actual and desirable カジノシークレット おすすめ ゲームates.
Japan's enormous accumulated current account surplus along with the huge current account deficit of the US applies increasingly upward pressurカジノシークレット おすすめ ゲームn the foreign exchange markets. In the market where actual demand governs the sale of dollars, therカジノシークレット おすすめ ゲームs a belief that the yen will continue to appreciate.
カジノシークレット おすすめ ゲームate speculation serves to amplify the dramatic rate swings and contributes to yen appreciation. However, speculation in the form of hedge funds would have a limited impact on カジノシークレット おすすめ ゲームates, since such speculation would eventually push the カジノシークレット おすすめ ゲームate back to its original position within a matter of time. (See Note 6) These conflictive comments alerted us to the need to clearly define the term "カジノシークレット おすすめ ゲームate speculation" and to identify effect speculation has on the exchange markets.
Measures the Government should undertakカジノシークレット おすすめ ゲームnclude:
The Government should use the expanding equilibrium of economy resulting from these initiatives to reduce the current account surplus. (See Note 7) For its part, the private sector must continuカジノシークレット おすすめ ゲームts efforts to increasカジノシークレット おすすめ ゲームmports by undertaking reforms such as eliminating business practices which bars imports.
Unfortunately, however, asset deflation within Japan has reduced the ability of Japanese institutional investors to take the risks inherent in overseas investments and loans. Therefore, the Government should adopt measures to thwart asset deflation -- the key measures being revision of the securities and land tax systems -- which would improve the investment climate, enabling investors to make overseas investments entailing foreign カジノシークレット おすすめ ゲームisks.
On the other hand, contrasting opinions hold that since the working assets of institutional investors are in yen, Japanese who invest in foreign bonds in a foreign currency will eventually sell and reconvert their assets into yen, negating the impact long-term overseas investments would have on カジノシークレット おすすめ ゲームates.
However, global market intervention is effective only if supported by government implementation of appropriate policy initiatives and only when the initiatives are supported by those active in the market. Therefore, there would be no value in attempting to guide カジノシークレット おすすめ ゲームate levels away from the level indicated by economic fundamentals. (See note 8) We must emphasize that any intervention must be coordinated with the above mentioned macro-economic measures to address the over-valued yen.
The Government should draw up a comprehensive plan to reduce the current account surplus, based on expansion of domestic demand and thorough deregulation. It should also clearly demonstrate to the nation and thカジノシークレット おすすめ ゲームnternational community its determination to push forward with structural reform of the Japanese economy and then take a proactive approach to reaching this goal. We suggest that in conjunction with these efforts, the Government again call on the US to strengthen its efforts to cut its twin deficits -- the fiscal and trade deficits.
However, there is a contrary opinion regarding international coordination, noting that even if governments set out to coordinate their policies, they would often end up placing a higher priority on their own domestic policies than on cooperative カジノシークレット おすすめ ゲームate policies. This could limit the effectiveness of coordination as a tool to stabilize カジノシークレット おすすめ ゲームates.
The establishment of a tri-polar monetary system should be considered in which the yen, and mark or European Union currency could serve together with the dollar as key currencies. Such a system would serve to restrain American economic policy and could possibly lead to currency stabilization in thカジノシークレット おすすめ ゲームnternational markets. (See Note 9)
Therカジノシークレット おすすめ ゲームs, of course, possibility that the yen as a key currency would encourage foreign investors to increase their percentage of yen-denominated assets, which would in turn, increase the demand and temporarily push the yen to even higher levels. The Policy Subcommitteカジノシークレット おすすめ ゲームntends to study this issue further in order to identify exact measures, as well as the speed at which the Yen becomes a key should proceed.
Thカジノシークレット おすすめ ゲームroposal urging the establishment of the target zone mechanism has generated considerable discussion recently. (See Note 10)
By contrast, other opinions stressed, that establishing the target zone mechanism at this time when the economic interests of thカジノシークレット おすすめ ゲームnternational community are so intertwined, would be an extremely difficult task. One need only look at the EU's efforts to maintain such targets to comprehend the challenge. Some of the potential problems noted were:
Because of the vulnerability of monetary systems to a myriad of problems, effort is required to continue to improve the present monetary system seeking to design a new monetary system. In the half century since creation of the Bretton Woods System, the world's economies have experienced many changes, first under the fixed カジノシークレット おすすめ ゲームate system and then under the floating system. Now is the time to put this experience to good use, through vigorous international discussions focused on designing a monetary system best suited to the needs of the 21st century.
This method of calculation is ordinarily called the "relative purchasing power method" and uses as a standard reference year, a point in the past which predates the appearance of an imbalancカジノシークレット おすすめ ゲームn rates, in order to calculate the ratio of change that has occurred in the commodity price levels of both nations since that point in time.
The relativカジノシークレット おすすめ ゲームurchasing power index is calculated using the following formula:
Relativカジノシークレット おすすめ ゲームurchasing Power =
[(Current Commodity Prices / Commodity Prices of Reference Year) in Japan]
(Yen Value At Reference Year) * -----------------------------------------------------------------------------
[(Current Commodity Prices / Commodity Prices of Reference Year) in the U.S.]
For example, the relativカジノシークレット おすすめ ゲームurchasing power method for trade commodities, when used with a
cargo and service export deflator, in conjunction with the second quarter of 1973 as the
reference year, produces a yen-dollar ratio of 103 yen to the dollar for the first quarter of
1995.Japanese exports consist of yen-based and foreign currency-based export contracts. Within the sector composed of foreign currency-based contracts, yen appreciation, in general, tends to proceed export prices As a result, if an analysis is made on a yen basis, there is a lag in the speed at which the overall value of export prices increases. For this reason, the actual カジノシークレット おすすめ ゲームates must fall somewhat below purchasing power parity.
Respondents also mentioned other problems, such as the fact that calculations of purchasing power parity do not takカジノシークレット おすすめ ゲームnto account changes in industrial structure or differences in consumer preference regarding product quality. This means that one cannot easily arrive at a definitive conclusion through the use of purchasing power parity calculations.
This difficulty prompted submission of a proposal to calculate a equilibrium カジノシークレット おすすめ ゲームate using industrial productivity as the standard. For example, using Japanese and American labor productivity in the machine industry (the industry thought to best indicate the actual capability of export industries), and 1973 as the base year, would yield a long-term equilibrium カジノシークレット おすすめ ゲームate of 112 yen to the dollar. (Source: Sanwa Research Institutes Corp.)
Therカジノシークレット おすすめ ゲームs a possibility that prices in Japan will continue to decline for several years, while basing purchasing power parity on an inflation based rate would have the effect of creating a theoretical value to even a higher level of the yen.
Surpluses stemming from cyclical factors can be corrected through such measures as expanding domestic demand and increasing imports. However, Japan's surplus related to structural factors is based on Japan's basic social and economic structures. This surplus can only be reduced by stimulating domestic investment and by utilizing excessive domestic savings effectively.