Japan has accelerated its drive for controversial foreign exchange stabilisation measures, saying they would top the agenda of a meeting next week of Asian and European finance ministers.
Japanese Finance Minister Kiichi Miyazawa said yesterday a gathering in Frankfurt next week for the second annual Asia-Europe Meeting (Asem) was likely to discuss a proposal to create currency bands, first raised by German Finance Minister Oskar Lafontaine.
The idea, which has so far been vigorously opposed by the United States, is supported by Japan, but appeared to be rejected by European Central Bank president Wim Duisenberg, who said exchange rate target zones were unworkable and potentially inconsistent with the bank's objective of achieving stable prices.
Under the German proposal, a set of target bands for the US dollar, euro and yen would be created in a bid to eliminate volatility.
Japanese Prime Minister Keizo Obuchi, who is in Europe for a three-country tour, has already won the support of French President Jacques Chirac, who is keen to establish any mechanism that would further enhance the credibility of the euro, which began trading this week.
After a summit on Thursday, a statement from the two leaders called for a 'renewed framework for mutual co-operation on exchange markets, including strengthened mutual dialogue on macroeconomic policies, given the launch of the euro'.
