Tokyo. May 30.
The Finance Ministry has decided to invoke the foreign exchange loss compensation system under which the Government will bear all losses incurred by Japanese foreign exchange banks in connection with yen-sterling exchange business. it was officially announced today. The system was approved by Parliament in March, It will become effective on June 1.
The Government explained that this action was taken because Japan's international commerce had been adversely affected by the inability of Japanese banks to transact in forward exchange in terms of British currency.
That was attributed to the impossibility of the Japanese banks to obtain a clear picture of future developments regarding British currency and currencies linked with it. parallolling the recent marked changes in the international situation.
The foreign exchange currencies covered will be the Br pound sterling. Egyptian pound. South African pound, Australian pound. New Zealand pound. Indian rupee. Straits Settlements dollar, Hongkong dollar and Thailand's baht.
Private banks' foreign exchange holdings of these currencies will be concentrated to the Yokohama Specie Bank through the Bank of Japan. The loss sustained by the Yokohama Specie Bank will be compensated by the Government. while profits will be taken by the Government, It was reported that the Government would adopt similar arrangements regarding foreign currency in terms of the American dollar. thereby completing the new structure of wartime foreign exchange business in Japan.—United Press.
Text read from the printed page and cleaned; old type leaves the occasional error.