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Japanese government makes changes to the banking system

The Japanese government is playing down fears of a financial crisis as it makes important changes in the banking system.

Bank of Japan Governor Masaru Hayami has repeatedly urged the government to replenish banks' depleted capital bases to over come anxieties among depositors and financial markets about the health of the banks.

As Tokyo Correspondent, Mark Simkin reports, some international economists believe changes to the financial system could result in a run on the banks.

From today, the Japanese government will no longer guarantee some bank deposits. That means customers stand to lose their savings if bank collapses. Given the weak state of the Japanese financial system with many banks technically insolvent there's a real fear that consumers will try to withdraw all their money. Some economists believe today could usher in a full-scale run on the banks. The Japanese government says that is unlikely though… saying the financial system is stable. Mark Simkin, Tokyo.

01/04/2002 13:36:02 | ABC Radio Australia News

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