Euro Crisis Spillovers To Asia So Far Mild, BoJ's Shirakawa Says

Bank of Japan Governor Masaaki Shirakawa said that the spillovers from Europe to Asian economies have been mild so far, though they are not immune to the debt problem.


"So far, the spillovers from Europe to Asia have been mild," Shirakawa said in a speech at a function hosted by the Japan Securities Dealers Association on Thursday.

However, given the European financial institutions' visible presence in Asian financial businesses, careful attention should be paid to deleveraging by European financial institutions, he said.

He identified three potential channels of contagion, namely, trade links, financial market disturbances and deleveraging by European financial institutions.

The policymaker also warned that the longer the disturbance continues in European financial markets, the harder the hit to the balance sheets of European financial institutions, which causes European deleveraging in Asia. "If this spreads to disrupt trade finance, Asian economies heavily reliant on exports would surely suffer," he cautioned.