The possibility that a giant Japanese bank might one day come crashing down, sending shock waves around the globe, is a recurring nightmare, not just for Japanese bankers but for treasury officials and bank executives around the world. Probably not, most bankers and analysts say. But they do not say so with as much confidence as they would like. When the United States and the International Monetary Fund rushed to bail out South Korea last month, their ultimate concern was less South Korea than its potential impact on Japanese and Western banks. Everyone knows there's a huge shoe that's got to drop.
Nobody knows when, who's going to pay and who it's going to land on.
So, of course, everyone's sort of frozen and trembling in the corner. Sure enough, the new finance minister, Hikaru Matsunaga, promised this past weekend that he would do his utmost to prevent any of the nation's top 19 banks from collapsing. Indeed, the money is there, for Japan is the largest creditor nation in the world, with assets that make the IMF look like a pauper, and so it is not risking the kind of liquidity crisis that felled South Korea. They know that they have a cushion and can engineer a soft landing. Still, there are jitters lurking in the market.