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JS-4079
Thank you for coming today. I am pleased to be here in Japan wrapping up a two-week trip through Asia. The message of this trip, which I repeated in every capital I visited, is that East Asia remains of central importance to the United States and to the global economy. The United States is committed to this region, our relationship with this region is long and deep, and we want to ensure that it remains vibrant.
This is particularly true of our partnership with Japan. The United States and Japan are the two largest economies in the world and what takes place in our two economies is critical to supporting global economic growth.
While here, I met with government economic officials and members of the foreign and domestic business community to discuss developments in Japan, the United States, and in the global economy.
I am encouraged by Japan's strengthening recovery and what looks to be the end of a long and difficult period. Indeed the fundamentals of the Japanese economy are now stronger than they have been for some time.
Japan's challenges now concern the longer term how to reduce fiscal deficit in a way that maximizes growth and how to meet the challenges of an aging society. Raising Japan's long-term growth rate will be critical to meeting these challenges. It is our hope that the Japanese government will pursue a policy agenda designed to boost long-term domestic demand-led growth.
In its financial system, we urge Japan to continue to push forward with financial sector reforms such as increasing regulatory transparency, improving the quality of capital at major and regional banks, raising the efficiency of consumer finance, and ensuring a level playing field in postal privatization.
In Manila I commended the President and the Congress for the difficult but necessary measures they introduced in the last year to reduce the fiscal deficit and cut losses in the power sector. I hope that the Philippine government will build on and extend the momentum that they have created over the past year to put Philippine public finances on a more sustainable path and reduce its vulnerability to changes in investor sentiment.
In my meetings with government officials in Kuala Lumpur I congratulated them on the sound policies that have underpinned Malaysia's growth and encouraged them to continue with structural reforms, improvements to the investment climate, and strengthening of the financial services sector. Also, greater exchange rate flexibility under the new regime would help Malaysia adjust to changes in the world economy and help ensure continued economic growth.
Singapore is another valuable ally in Asia for the U.S. I met with senior officials there to discuss the regional economy and the prospects for closer integration in Southeast Asia. We also discussed the importance of free and vigorous trade in the region and globally through a successful Doha round.
From Southeast Asia, I flew to Beijing to continue discussions on introducing greater exchange rate flexibility, strengthening our cooperation on reforming and opening China's financial sector, and achieving more balanced growth.
The global economy has enjoyed strong growth in recent years and Asia's economies are a large factor in this. Continuing good growth will depend on strong global international financial institutions that reflect large and growing cross-border capital flows and the evolving reality of today's economy.
I'm pleased to have been able to attend the G-20 Workshop on Reforming the Bretton Woods Institutions hosted by Japan's Ministry of Finance here in Tokyo.
We discussed how the IMF and World Bank have adapted to serve usefully as the central institutions for international monetary cooperation and development, even amid fundamental changes in the global economic and financial system. But all of us agreed that more fundamental change is needed.
In particular, we discussed the need for the governance structure of the Fund to better reflect the world economy, including by recognizing such fundamental changes as the tremendous growth in some parts of Asia and the advent of the Euro. We in the U.S. are pushing for comprehensive reform of the IMF, including increased quota shares in the IFIs for many fast growing emerging markets, including those in Asia, and a more streamlined board structure which gives emerging markets greater prominence at the table. The G-20 will be an important forum as discussions on this goal move forward.
I also found great support in our meetings for U.S. proposals to strengthen the IMF's role in foreign exchange surveillance, which is another priority area for fundamental reform.
Thank you again for coming, I'd be pleased to answer any questions.