Japan is looking to allow private sector funds and trust banks to manage a part of its US$1.27 trillion (RM4.04 trillion) pool of foreign exchange reserves in a drive to manage them better, a government source said yesterday.
Until now, the government has managed the foreign exchange reserves itself, but its ability to do so has been stretched as the reserve roughly doubled over the past decade, thanks to massive yen-selling interventions to weaken Japan's currency.
The government needs to clear legal hurdles on its use of foreign exchange assets if it wants to draft in the services of private financial institutions and will propose amending the law during a parliamentary session that begins tomorrow.
The government is now restricted to lending its foreign securities only to banks, but the new law will also permit brokerages to borrow securities, the source said, with the fees borrowers pay going to replenish government coffers.
Until now, the government has managed the foreign exchange reserves itself, but its ability to do so has been stretched as the reserve roughly doubled over the past decade, thanks to massive yen-selling interventions to weaken Japan's currency.
The government needs to clear legal hurdles on its use of foreign exchange assets if it wants to draft in the services of private financial institutions and will propose amending the law during a parliamentary session that begins tomorrow.
The government is now restricted to lending its foreign securities only to banks, but the new law will also permit brokerages to borrow securities, the source said, with the fees borrowers pay going to replenish government coffers.
The government will not alter its stance of investing the bulk of its foreign exchange reserves in US Treasuries and other high-grade investment bonds, and it will allow private sector institutions to manage only a few per cent of the reserves, the Nikkei business daily reported
