Japan calls on Europe to act 'responsibly'

Japan said Wednesday Europe must act “responsibly” to solve the debt crisis that is wracking the world economy after G7 finance ministers ramped up pressure on the continent’s leaders.

Japanese Finance Minister Jun Azumi said politicians needed to move to stem the tide.

Azumi was speaking the morning after an emergency teleconference with fellow finance ministers in the G7 group of leading industrialised nations.

Immediately after the conference call late Tuesday, Azumi said he had been given assurances by his European counterparts that they will work to fix the problems gripping the continent.

Azumi said political leaders needed to act to reassure markets, which have proved increasingly volatile, with traders seemingly unimpressed by what many see as half-measures.

Japan has become ever-more anxious over the effects of the debt problem in Europe, which is a key market for the exports that drive its economy.

Global financial uncertainty has also driven market players to seek refuge in the safe haven yen, sending the currency soaring and further squeezing companies that make their money abroad.

Overnight the White House said it hoped for “accelerated” action on the crisis in Europe and on shoring up debt-ridden banks, as world leaders ready for the G20 in Mexico later this month.

European members of the G7 told the conference call they would act “speedily” as Spain pleaded for deeper fiscal and banking integration that would help its stumbling banks.

Spain wants the EU to allow the European Stability Mechanism (ESM) bailout fund — due to come into force in the coming weeks — to directly recapitalise banks struggling to raise 80 billion euros to shore up their books.

A state bailout from the EU and the International Monetary Fund would come with a politically humiliating austerity programme attached to it.

Germany has opposed changing the ESM’s rules to allow direct intervention in banks until the eurozone puts into place stronger measures on banking and fiscal integration.

Bailing out Spain, the eurozone’s fourth largest economy, representing 12 percent of the bloc’s output, would be costly.

Cyprus, which has been shut out of the bond banks, also sounded the alarm Tuesday over its banks.

He said the government was looking at various ways to support its banks, which included finding a loan “from elsewhere”.

Cyprus has already secured a 2.5 billion euro ($3.2 billion) low-interest loan from Russia to cover its refinancing needs for this year.