How the US Helped Japan Pull Off a $97 Billion Yen Rescue
Treasury Secretary Scott Bessent tells Senator Elizabeth Warren that the United States never lent Japan a cent. It bought yen instead. Accordingly, Japan owes nothing, so nothing can go unpaid.
Warren had warned that taxpayers would eat the loss if Japan failed to repay. Treasury's own monthly filings back Bessent on how the yen intervention worked. They also weaken her wider case.
The Fund Can Only Hold Euros and Yen
The Exchange Stabilization Fund is a Treasury reserve the secretary can tap without a new vote in Congress. Its foreign cash comes in just two currencies.
On June 30, the fund held $14.19 billion in euros and $2.57 billion in yen. So selling euros for yen was the only trade on the menu.
A loan creates a debt, bun asset swap does not. The fund simply owns more yen than it did in July.
"Japan owes Treasury nothing. There is therefore no risk that Japan will fail to repay a debt that does not exist," Bessent wrote in the letter.
The real risk is price, not default, as the yen traded at 160.17 per dollar as of this writing, weaker than the 157.4 the rescue delivered. This means most of the gain has drained away.
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