Japanese Finance Minister Fukushiro Nukaga sounded a cautious note yesterday toward creating a sovereign wealth fund, saying that aggressive investment was risky.
"Active management of public wealth involves high risks. So we need to thoroughly study which part of government money, for what purpose and how it will be invested before making a decision," Nukaga told reporters.
His comments came as the ruling Liberal Democratic Party was to launch a panel later in the day to look into creating a sovereign wealth fund, or government-run investment pools, similar to those that exist in Singapore, China and the Gulf.
Some lawmakers have suggested Japan set up a fund to diversify and seek better returns on the country's nearly US$1 trillion in foreign currency reserves, most of which are believed to be invested in safe but low-yielding US Treasuries.
Japanese Prime Minister Yasuo Fukuda also said recently that the government "must be cautious" in managing national assets.
The wary comments from Fukuda and Nukaga suggest Tokyo doesn't plan to create a sovereign wealth fund anytime soon.
Although Nukaga noted the importance of managing the national wealth effectively, he pointed out differences between Japan and countries that are already actively investing their national wealth.
Economy Minister Hiroko Ota said the government isn't planning to put a proposal for a sovereign wealth fund in its upcoming economic growth plan. More discussion is needed on the size and management of the nation's reserves, but not on setting up a fund to manage them, she said.
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