Japan govt says banking system stable, plays down risk of contagion

TOKYO (Reuters) – Japans banking system is stable and the country will not see a contagion from U.S. and European banking sector woes, Chief Cabinet Secretary Hirokazu Matsuno said on Monday.

He also welcomed Sundays decision by top central banks, including the Bank of Japan (BOJ), to bolster the global flow of cash by expanding an existing swap line to ensure lenders have sufficient dollars needed to operate.

“Each country promptly ramped up efforts as risk-aversive moves were seen in financial markets,” Japans top government spokesperson told a regular news conference.

“Japans financial system is stable as a whole,” he said, adding that authorities were watching financial market moves “with a strong sense of alarm”.

The remarks came after Finance Minister Shunichi Suzuki told reporters on Monday the government would continue to “carefully assess” how a weekend rescue deal for Credit Suisse Group would affect Japans financial sector.

Asian stocks steadied and U.S stock futures rose on Monday in relief at a weekend rescue deal for Credit Suisse and concerted central bank action, though trade was tense and volatile as contagion fears stalked financial shares.

Japanese policymakers have brushed aside the chance of contagion in Japan, saying domestic banks had sufficient capital buffers to absorb losses caused by various external factors including risks from the collapse of U.S. lenders.

(Reporting by Leika Kihara and Tetsushi Kajimoto; Editing by Tom Hogue and Jacqueline Wong)