Hiroshi Okuda, chairman of the Japan Federation of Employers Associations (Nikkeiren), voiced opposition Wednesday to a proposal to temporarily freeze the mark-to-market method of accounting to protect banks' weakening capital bases.
The freeze proposed by Takashi Imai, chairman of the Federation of Economic Organizations (Keidanren), "should not be done," Okuda said at a news conference.
The mark-to-market accounting method "was already implemented in book closings for the first half (of fiscal 2001) and is an international pledge" by Japan, he added.
Under the new accounting rules, banks must book their stockholdings for long-term possession, such as cross-held shares, at market value, and deduct 60 percent of latent equity losses from their reserve capital -- the source of dividend payments.
With banks hit hard by falling share prices, Imai earlier this month called for a temporary freeze on the rules as a step to help banks improve their financial strength and promote the disposal of bad loans.
Imai's proposal was criticized in financial markets as a measure to stall the resolution of the nation's bad-loan problem.
As to Imai's call for an additional injection of public funds into banks, Okuda said, "If necessary, (public funds) should be injected without wasting time."