Bank of Japan Governor Ueda and Japan finance minister Suzuki spoke over the weekend, at the conclusion of the G7 meeting in Italy.

Suzuki said he hadn’t had a one-on-one meeting with US Treasury Secretary Yellen. Which seems to indicate no discussion on co-ordinated yen intervention took place. Prior to the weekend Suzuki’s offsider, Vice MInister for International Affairs Masato Kanda (the official who will instruct the BOJ to intervene, when he judges it necessary) had basically said there was no need for a meeting.

Earlier this month Yellen was not encouraging of the idea:

A few days later there was more cold shoulder from Yellen:

Not to hammer this point too much but Yellen repeated the same just last week, that intervention should be rare and well-telegraphed in advance.

So, it was only a Suzuki and Ueda tag team show after the G7.

Suzuki:

• Reaffirmed the G-7 commitments on foreign exchange
• Said that many factors are making contributions to increase in yields
• Warned against maintaining rates above zero

And with rising rates in Japan he also

• called against maintaining rates above zero… “We must be acutely aware that the world of positive interest rates has come … we will make progress in restoring fiscal health with more sense of urgency than ever.”

Bank of Japan Governor Ueda seemed happy to let Suzuki handle the gnarly issues, shrugging it all off with:

• Long-term bond yields are determined by financial markets in principle
• Will monitor fixed interest markets

Ueda didn’t talk about the rate path ahead, nor did he specify much on the chances of trimming back on Japanese Government Bond bond purchases at the next policy meeting (this is in June).

Stock photo: Getty Images

The G7 finance ministers supported the idea of providing Ukraine with a loan secured by profits from frozen Russian assets to ensure funding for Kyiv after 2024.

Source: Financial Times, citing the draft communiqué of the ministers’ meeting, as reported by European Pravda 

The ministers’ discussions were based on a US proposal, which was circulated before the meeting in the Italian city of Stresa, to issue Ukraine a loan of about US$50 billion, to be repaid from the profits of the Russian central bank’s assets amounting to around €190 billion. 

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The ministers stated that they were “making progress” in working out options to “bring forward” the profits, according to the draft communiqué. They added that options for structuring the loan would be presented to the G7 leaders before the June summit.

They also promised to continue pressuring China to reduce industrial subsidies that they believe are driving Western competitors out of business, and stated that implementing the most significant global tax agreement in more than a century is a “top priority”.

The G7, a group of advanced economies that includes all major Western allies of Ukraine, aims to ensure funding for Kyiv in the long term, even after this year when crucial elections will take place on both sides of the Atlantic. 

According to people familiar with the negotiations, many details of the loan are yet to be agreed upon, including the amount, who will issue it, and how it will be guaranteed in case of Ukraine’s default or if the profits do not materialise. 

One official mentioned that Europeans are particularly concerned about “fair-risk sharing”, fearing that Europe will bear the brunt of the financial and legal risks and potential retaliatory actions from Russia, as most of the assets are located on the continent.

This week, the EU officially approved a plan to use interest from frozen Russian assets, which, according to estimates, could bring up to three billion euros per year to Ukraine.

Background:

• In February, the United States argued that G7 countries should fully seize frozen assets, but later abandoned this idea due to concerns from allies that it could set a dangerous legal precedent and prompt retaliatory measures from Russia.
• Earlier, Minister of Foreign Affairs Dmytro Kuleba stated that Ukraine insists on the confiscation and transfer to Ukraine of all frozen assets of the Russian Federation held in the West.

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