Japan Denies IMF Seeking $600 Billion to Help Euro Zone

“Speculation among speculations,” says cabinet member

A report in the daily Nikkei paper that the G20 was putting together an International Monetary Fund (IMF) $600 billion lending facility to help the euro zone was denied, first by the IMF and then Canada, and then by Japan.

A Japanese cabinet member called the report “speculation among speculations,” Reuters reported.

"I generally hear such discussion as each country may provide bilateral loans to the IMF," the official said, asking to remain anonymous. He added, "I'm not aware of any concrete talks taking place as to whether, when and how much of such contribution would be made as there's no substance to how the IMF would support Europe."

The Nikkei had said that the 20 countries were planning to put together the lending facility, intended to help euro zone countries in need of assistance, and that key G20 nations like Japan, the U.S. and China would contribute to the facility.

A South Korean G20 official also denied any such development, saying in the report, “There's no progress made on the matter of seeking ways to boost financial resources at the IMF since the Cannes [G20] summit."

And Canadian Finance Minister Jim Flaherty said, "There are some nuances to the positions of some countries, but I assure you there has been no commitment by the G20 to any specific resourcing plan."

Japan, which has loaned $100 billion to the IMF in the wake of the 2008 global financial crisis, still regards bonds issued by the European Financial Stability Facility (EFSF) as safe, according to the unnamed official, despite Standard & Poor’s threats to downgrade the EFSF if the six triple-A rated nations in the euro zone suffer cuts.

"We still consider [EFSF bonds] as safe assets and will continue to buy them at a certain rate in accordance with liquidity," the official said. He added, "We will consider lending support to the IMF and EFSF purchases depending on the situation in Europe."

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