ABSTRACT
This chapter explores two closely related issues at the centre of how the G7 and the International Monetary Fund's (IMF) global financial governance affect Asia and, in particular, Japan, and how Asia and Japan in turn affect the G7 and the IMF. The first issue is the character of Prime Minister Koizumi's reform initiative and its implications for the Japanese economy. The second is the Japanese approach to the global effort to build a more enduring, and effective, international financial architecture. The process of rebuilding a healthy financial market and restructuring indigenous corporations seemed to progress slowly. It is now judged to be a long-term exercise to re-establish an institutional foundation that can secure self-sustainable indigenous growth. The privatisation of public institutions under Fiscal Investment and Loan Program is a critical ingredient to Koizumi s initiative. The pressing task confronting Koizumi is to fix the problem of nonperforming loans at the banks.
