Japan’s foreign reserves hit an all-time high again; still no talk of a soverign fund

4 Responses to “Japan’s foreign reserves hit an all-time high again; still no talk of a soverign fund”

1. Sovereign Fund Not Happening: ‘Official’ at the G7 Conference : Japan Economy News & Blog on December 2nd, 2007 11:21 pm

   […] We’ve been following the issue of whether or not Japan will decide to set up a sovereign wealth fund with some interest. Now that Japan’s foreign reserves have surged to an all-time record of $945 billion, we have speculated that pressure to launch such a fund would begin mounting. […]

2. joshua Duah on May 18th, 2008 5:42 pm

   This was announced last Friday, but we needed some time to look at it all. With China launching its $200 billion China Investment Corp (GIC) on September 28, we expected to see some more talk of Japan considering launching a sovereign fund. If not talk, then gossip. Or, if not gossip, at least some sniping in the media. But there has been nothing, and we have nothing to report except that the value of Japan’s foreign reserves continues to rise, and that the Ministry of Finance still seems less risk-averse than the scheduling committee at a Big-10 football school (I picked that one out of a hat. I won’t mention which school I have in mind, though it starts with an “O” and Barry Sanders didn’t go there).

   We’ll have our eyes peeled for news over the coming weeks, though real discussion may not happen until the $1 trillion

3. Ken Worsley on May 18th, 2008 7:52 pm

   Wasn’t Oklahoma State Big 8?

4. Ken Worsley on May 21st, 2008 12:01 am

   joshua,

   Seriously, though, there has been quite a bit of talk about a sovereign wealth fund, though it has been little reported outside of the Japanese media.

   We reported on it here in March:

   The ruling Liberal Democratic Party set up a panel to discuss the possibility of establishing such a fund last month, and it met for the first time on February 22. It’s goal is to write a bill in April, submit it to the diet this fall, and have it enacted sometime early in 2009.

   Of course, that bill has not been written.

   And again in March: No Surprise: Ministry of Finance working against moves to set up sovereign wealth fund

   We’re not going to settle the issue of whether or not a sovereign wealth fund is a good idea for Japan in one simple post, so there’s no point in attempting such an exercise (it’s probably not a good idea, since it will simply get mismanaged anyway). But what is worth looking at is the resistance coming from the bureaucracy. One may say that they do not want to relinquish control over the nation’s foreign reserves - after all, the MOF worked so hard to earn that $1 trillion by issuing trillions of yen worth of sovereign debt.

   My take: Japan is too far in debt to launch such a fund, both fiscally and to the ruling bureaucracy.

   It is a shame, however, that more has not been published in the English-language media on the issue.

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