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Japan to buy bonds to help Europe through debt crisis

11 January 2011 12:29 (UTC +04:00)

Baku â€“ APA-Economics. Japanese Finance Minister Yoshihiko Noda said Tuesday that the government would purchase eurozone bonds to help the region as it struggles with a debt crisis among some of its members, Monsters reported.

Noda said Japan would use its foreign-currency reserves to buy more than 20 per cent of the bonds to be issued this month by the European Financial Stability Facility, the eurozone’s sovereign rescue fund, which aims to help debt-ridden European states.

Japan’s participation means that the world’s two largest holders of foreign-exchange reserves were to lend assistance to Europe after China declared last week that it would purchase more of Spain’s debt.

Spain is one of the eurozone countries caught up in the debt crisis. Ireland followed Greece last year in seeking a bailout backed by the International Monetary Fund and the European Central Bank.

As concerns grew that Portugal would also need a bailout, the euro fell sharply against the US dollar and the yen on the currency markets.

Noda told reporters that it was appropriate for Japan to make a commitment to help the rescue fund ’gain some confidence.’

The fund was established in 2010 with 440 billion euros (569 billion dollars) committed by the then-16 eurozone states. The rescue fund was designed to preserve the financial stability of Europe’s monetary union by providing temporary financial assistance to debt-ridden members. Japan’s foreign-exchange reserves stood 1.096 trillion dollars, including 1.036-trillion-dollar foreign-currency reserves, at the end of December, declining by 4.86 billion dollars from the end of November, the finance ministry said Tuesday.