10 Years On: Economic Stimulus amid Crisis Leaves Japan Deeper in Debt


Tokyo, Sept. 24 (Jiji Press)--To prop up an economy battered by a once-in-a-century financial crisis triggered by the collapse of U.S. investment bank Lehman Brothers, Japan used the full range of available economic policy tools.

But the cost of the stimulus came back to haunt the country in the form of a mountain of government debt.

Only 90 minutes after the bankruptcy filing of Lehman Brothers was announced on Sept. 15, 2008, Hiroshi Nakaso, then chair of the Markets Committee of the Bank for International Settlements and head of the Bank of Japan's Financial Markets Department, convened an emergency conference call of BIS committee members. "(We were) unsure what would happen in the days ahead," recalled Nakaso, who later became deputy governor of the BOJ.

Financial markets were thrown into panic globally, with stock prices plunging in many markets. Nakaso scrambled to put together an arrangement for the mutual supply of dollar funds among six central banks in Japan, the United States and Europe amid concern that Japanese banks might become unable to procure foreign currencies for lending to overseas customers.

"Mechanisms for international coordination were firmly in place," including the framework of the Group of 20 major advanced and developing nations, Naoyuki Shinohara, former Japanese vice finance minister for international affairs, noted.

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