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UPDATE: MOF Noda:Strict Surveillance May Trouble Some Nations

ST. ANDREWS, Scotland -(Dow Jones)- Japanese Senior Vice Finance Minister Yoshihiko Noda said Saturday the Group of 20 leading economies shouldn't be too ambitious coordinating policies to achieve sustained and balanced growth.

The project would be "beneficial" if it helps member nations understand each other's policy through frank discussions, Noda said at a joint press conference with Bank of Japan Governor Masaaki Shirakawa after the end of a two-day meeting of G20 finance officials.

"If you too strictly conduct the surveillance of each other's policies, that could prove to be troubling to some countries," he said, adding that the G20 needs to handle this project "in a flexible manner."

"And I believe--this is an important point--that instead of taking an excessively ambitious approach, we should start out the project as a realistic process and move forward while having discussions [within the members]," he said. "That would be an appropriate approach."

Noda's comments may be an indication that Japan doesn't want any strict international policy coordination to limit its room for maneuver in steering economic policy.

Shirakawa, meanwhile, said he told the G20 members that the BOJ will continue its low-interest-rate policy until Japan's economic recovery firmly takes hold.

Turning to U.K. Prime Minister Gordon Brown's proposal earlier Saturday for a tax on financial transactions, Noda said "there are many difficult issues" around the proposed levy.

"There are many things that need to be debated. We will carefully consider this matter," he added.

With regard to the Japanese economy, Noda said that there is "an argument that Japan should do more to boost its domestic demand."

"I've told [the G20 members] we want to achieve economic growth led by domestic demand," he added.

Noda said the G20 members didn't discuss foreign exchange at their meeting.

"Foreign exchange, including the yuan, wasn't a main agenda topic, so I had no opportunity to talk about that issue," he said.

-By Takashi Nakamichi, Dow Jones Newswires; 813-6895-7558; takashi.nakamichi@ dowjones.com

  (END) Dow Jones Newswires
  11-07-091347ET
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