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Former US Treasury Secretaries Timothy Geithner and Henry Paulson discussed the complexities of Japan's currency intervention to stabilize the yen. They noted that while intervention can provide short-term relief, Japan faces structural economic challenges that make defying market forces difficult.
Why it matters
The discussion provides insight into global economic stability and the potential risks of currency manipulation on international bond markets.
Japan can't 'defy economic gravity' after yen intervention, says Bush's former Treasury Secretary D By David Chau
Former US Treasury Secretary Timothy Geithner, who oversaw US participation in a G7 joint yen sale after a devastating 2011 earthquake, told CNBC that currency intervention could help.
"But it only really works if it's a bridge to policy or if it's working with the underlying direction of policy over time," he said.
Mr Geithner, who served during Barack Obama's first presidential term, said financial markets anticipated that Japan would need to follow through with an interest rate hike.
"That'll help reinforce the objectives of this intervention in some sense," he added.
"And if intervention is coordinated by the major powers, it could be more effective. So there's a chance this would be effective."
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