Japan Rules Out Using U.S. Treasury Sales as Trade Bargaining Chip

Japan does not plan to threaten to sell the $1 trillion-plus of U.S. Treasuries it holds in trade negotiations with Washington, said its Finance Minister on Sunday. He clarified earlier comments that the bond holdings might be used as a negotiating chip.

Katsunobu Kato, the Japanese Finance Minister, said: “My comments were in response to a query about whether Japan, as a tool for bargaining in trade negotiations with Washington, could explicitly reassure Washington that it wouldn’t easily sell its Treasury Holdings.”

Kato said at a Milan press conference that the comments were not meant to suggest that Treasury holdings should be sold.

Kato, in a TV interview Friday, said that Japan’s U.S. Treasury Holdings could be used to its advantage in trade negotiations. This was the first time Japan had been able to use this leverage, as it is a major creditor of the United States.

Kato added in the interview that whether Japan uses this card is another question.

Kato said at the press conference held on Sunday that Japan’s U.S. Treasury Holdings, the largest in the world, are to provide Japan with sufficient liquidity for yen interventions when needed.

He said, “This is our position, and we do not plan to use the sale of U.S. Treasury Holdings as a tool for bargaining in negotiations.”