Japan's Yosano: dlr to remain world's key currency

[Beetle]

2009-06-16 02:45
UPDATE 1-Japan's Yosano: dlr to remain world's key currency


TOKYO, June 16 (Reuters) - Japanese Finance Minister Kaoru Yosano reiterated on Tuesday his view that the dollar will remain the world's key reserve currency, despite rising calls among some countries to reduce dependence on it.
"I have strong confidence in (the U.S dollar.) That has not changed at all. U.S. policy is to maintain a strong dollar. Examining it from all aspects, the U.S. dollar will remain the key currency," Yosano told a news conference after a cabinet meeting.
Leaders of the world's biggest emerging economies -- Brazil, Russia, India and China -- are expected to discuss ideas for a new reserve currency at their first formal summit next week.
Although the dollar's trade-weighted index is above its low hit last year, worries that investors may lose confidence in the dollar are simmering as the U.S. budget deficit is ballooning following the economic crisis.
Currently about 65 percent of foreign exchange reserves are in dollars.
Japan does not disclose the currency breakdown of its $1 trillion of foreign reserves but much of it is thought to be in dollars, making it the world's second-largest holder of U.S. Treasuries after China.
Japanese officials have said they do not see a change in the dollar's status as the key currency in the near future.
The dollar rose broadly on Monday after Russian Finance Minister Alexei Kudrin, speaking on the sidelines of a Group of Eight finance ministers in Italy, said the dollar's role as the world's main reserve currency is unlikely to change in the near future.
Kudrin's comments marked a reversal of Russia's previous calls for the world to become less dependent on the dollar and a pledge on June 10 by Russian central bank First Deputy Chairman Alexei Ulyukayev to cut its holdings of U.S. Treasuries. Russia holds the world's third-largest foreign exchange reserves.

China, holder of the largest currency reserves, and Russia have argued in the past that central banks could use special drawing rights from the International Monetary Fund to diversify their reserves away from the dollar. (Reporting by Hideyuki Sano; Editing by Michael Watson) Keywords: JAPAN ECONOMY/YOSANO (hideyuki.sano@thomsonreuters.com; +81 3 6441 1827; Reuters Messaging: hideyuki.sano.reuters.com@reuters.net)

http://www.iii.co.uk/shares/?type=ne...action=article

[Beetle]

Russian minister bolsters greenback

Bloomberg in Washington Jun 16, 2009

Russian Finance Minister Alexei Kudrin has thrown his support behind the US dollar, saying at the weekend it was in "good shape" and further affirming there is no substitute for the world's reserve currency....

http://www.scmp.com/portal/site/SCMP...ser&s=Business

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We are getting mixed signals

Russia's Consensus View Against A Single Dominant Currency Weighs On USD

Font Scale:

16 June 2009 @ 08:58 am ET

USD's movement continues to affect commodity prices and the greenback's pullback after Dmitry Medvedev, Russia's President, reiterated his intention to push for the creation of a 'supranational currency' to replace USD. Crude oil price recovers in European morning to above 71 level again.

At a meeting with other central Asian countries, Medvedev said that 'there can be no successful global currency system if the financial instruments that are used are denominated in only one currency...today this is the case and the currency is the dollar.' Selloff in USD was triggered after the president stated his worries last week but Russia's finance minister eased the decline by saying the dollar is in 'good shape'. While comments from the 2 leaders in Russia seem to be contradicting, Medvedev's top economic aide Arkady Dvorkovich stated that the nation is united on the dollar policy and believes 'in long term, it's beneficial for all and all agree that the world needs a few strong currencies but it cannot happen quickly'.

Another important issue at the meeting is that China offered to provide $10B loans to help member states of the Shanghai Cooperation Organization (SCO) survive financial crisis. SCO member states include China, Russia and the 4 Soviet republics of Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.

Precious metals' declines stabilize as the dollar loses ground. The benchmark contract for gold edges higher to 934 while that for silver adds 22 cents to14.25.

News said that China may raise ex-refinery gate prices for gasoline and distillate products later end of this month as international crude oil price has surged rapidly. If that's the case, it will be the second time in a month that the National Development and Reform Commission (NDRC) increased prices on oil products. On June 1, NDRC increased domestic gasoline and diesel prices by +7% and +8%, respectively.

Unlike countries in the advanced economy, prices for oil products in China is under government's control in order to make sure that consumers with low affordability can also buy oil products. However, such control has squeezed refinery margins on refiners for years
In early May, NDRC unveiled more details about the new oil pricing mechanism introduced in the beginning of 2009. Under the new policy, NDRC may adjust domestic oil product prices when the moving average of 'international crude oil prices' (Brent, Dubai and Cinta) change more than 4% of a period of 22 working days.

One problem is that while NDRC has tried to adhere closely to the new mechanism, the State Council has the final say and this makes the pricing regime remain to be quite political. The last price hike before June was on March 25 when the government increased ex refinery price of gasoline and diesel by +5.3% (+RMB 290/ton) and +3.7% (+RMB 180/ton) respectively. In fact, another price hike should have been warranted in April but the State Council rejected it as the reaction after March's raise was rigorous, mostly on the negative side, as newspaper always compared domestic product prices (including fuel consumption tax and 17% VAT) with prices in the US where taxes are low or tax-free product prices in Singapore. This created a perception that oil products in China were more expensive.

The price hike in early June in fact came in later and smaller than expected as the gasoline and diesel prices were risen by RMB400/ton, compared with RMB 750-800/ton suggested by 'international oil prices' at that time. The next cut-off day for China's pricing mechanism is June 26. By that time, 'international oil prices' may reach USD67/bbl, higher than the 4% fluctuation and should be justified for another price hike.

If you are investing in Chinese stocks, Sinopec (0386.HK) should benefit the most from the move given its biggest exposure to refining in China.

As of 1Q09, refinery business contributed 44% (RMB 7.3B) of the company's operating profit with the rest of the business in E&P, marketing and distribution, and chemicals.

[Malsua]

Hope springs eternal...all these folks holding USDs don't want to have to use it as toilet paper.

[Beetle]

And if they lose hope, they will flush all those dollars on the market and we will be in big trouble.

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Before all the talk of new currency standard was a threat to the Administration to stop the spending and devaluing the U.S. dollar or they might sell.

Now the message has moved in the opposite direction.

Something may have changed.

Some might be actually now in the process of quietly unloading portions of their holdings at the highest value possible while others could be getting paid off.

Seizure of US government bonds from two Japanese men in Italy raises questions

» 06/12/2009 19:05
ASIA – ITALY



Seized US bonds are worth US$ 134.5 billion. The whole affair touches a number of economic and political issues. For some the resignation of Japan’s Interior minister might be related to it.

Milan (AsiaNews) – There have been new developments with regards to the story of US$ 134.5 billion in US government bonds seized by Italy’s financial police at Ponte Chiasso on the Italian-Swiss border, which AsiaNews reported four days ago. News about it initially made it to the front page of many Italian papers, but not of the international press. Since yesterday though, some reports have published by English-language news agencies. And some commentators are starting to link the story to reports in US press dating back to 30 March.

On that date the US Treasury Department announced that it had about US$ 134.5 billion left in its financial-rescue fund, the Troubled Asset Relief Program (TARP), whose purpose is to purchase assets and equity to buttress companies in trouble. The existence of such means that the Obama administration may not have to go to Congress for additional funds, something which is especially important since many lawmakers have vowed to oppose any requests for more money.

At the same time, Japan’s Kyodo news agency has reported that the resignation of Japan’s Interior Minister Kunio Hatoyama might also be related to the Ponte Chiasso affair. Officially the minister quit as a result of a row over who should head the state-owned Japan Post, but some sources have suggested that such a scenario is not very plausible since Mr Hatoyama was Prime Minister Taro Aso’s main ally in his rise to the prime minister’s office, and is especially unconvincing since the ruling coalition government has to face elections in just two weeks time. Indeed there are many reasons to connect the Ponte Chiasso incident to the minister’s resignation.

First of all, the men carrying the bonds had a Japanese passport. Secondly, they were not arrested. Under Italian law anyone in possession of counterfeit cash or bonds worth more than a few tens of thousands of euros must be arrested. By comparison the value of the seized counterfeit bonds is equal to 1 per cent of the US Gross Domestic Product (GDP). Thirdly, how the seizure took place is worthy of a Monty Python movie—two well-dressed Japanese men carrying a briefcase travelling in a local train usually used by Italian manual labourers who commute to Switzerland for work had as much chance to go unobserved as two European businessmen travelling in the Congo.

For AsiaNews the incident raises several questions. For example, why did Italy’s press, of every stripe, first give the matter great visibility, only to drop it as quickly? Also, if we are to assume that the bonds are real, why were they in Italy on their way to Switzerland? If these were the unused TARP funds why would they be in US Federal Reserve denomination? Would it not have been better to wait to see how they would be used before the bonds were issued? If they are authentic and owned by a foreign state, why were they not transported in a diplomatic bag, which cannot be inspected at customs? And what will the Italian government do insofar as the issue represents an offence under Italian law? Will it impose a fine of 38 billion euros, and run the risk of a row with an ally, or return the money without any penalty to the rightful owner and show the world that Italy is some kind of banana republic, a semi-colonial protectorate that violates its own laws and constitution?

Whatever the case may be, for Italy’s Prime Minister Silvio Berlusconi it is a heavy burden to bear, given the legal and criminal consequences he might face.

The only people who come out of it well are Italy’s tax cops, reason for them to show off their success on their website.

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2 Japanese Carrying $134 Billion In U.S. Bonds Detained In Italy

June 11, 2009 by national

Update: Italy’s financial police said they asked the U.S. Securities and Exchange Commission to authenticate $134 billion worth of undeclared U.S. government bonds found in the false bottom of a suitcase carried by two Japanese travelers attempting to cross into Switzerland. A determination is expected within a few days.

Original Post
According to Japan Today, two Japanese nationals were detained by Italian financial police last week after trying to enter Switzerland with $134 billion worth of undeclared U.S. bonds, mostly Treasury bonds, an Italian daily said Wednesday. The Japanese consulate general in Milan confirmed that the detention had taken place and said it was trying to confirm with Italian authorities whether the two were indeed Japanese nationals and their identities.

According to the report in il Giornale, two unidentified Japanese in their 50s concealed the bonds, including 249 U.S. Treasury bonds each worth $500 million, in a suitcase with a false bottom that was searched by the Italian authorities June 3 when they were in Chiasso, at the border with Switzerland, about 50 kilometers north of Milan. The daily did not say on what charges they have been detained, but the two may have been detained on suspicion of attempting to take a large amount of securities out of Italy without declaring it because the paper said they had not declared the bonds.

The treasure was in the hands of two Japanese from Italy were trying to enter Switzerland. In a suitcase were 249 bonds of the ‘Federal Reserve‘ American in the nominal value of 500 million each, and 10 ‘ bond Kennedy ‘ of the nominal value of $ 1 billion each, in addition to whta is described as very original banking documentation.

Everything has been reported to have been seized and authorities are investigating the 2 as well as the authenticity of the bonds.

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Japan Probes Report Two Seized With Undeclared Bonds (Update2)

By Shunichi Ozasa and Makiko Kitamura
June 12 (Bloomberg) -- Japan is investigating reports two of its citizens were detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland.

“Italian authorities are in the midst of the investigation, and haven’t yet confirmed the details, including whether they are Japanese citizens or not,” Takeshi Akamatsu, a spokesman for the Ministry of Foreign Affairs, said by telephone today in Tokyo. “Our consulate in Milan is continuing efforts to confirm the reports.”

An official at the Consulate General of Japan in Milan, who only gave his name as Ikeda, said it still hasn’t been confirmed that the individuals are Japanese. “We are in contact with the Italian Financial Police and the Italian Public Prosecutor’s Office,” Ikeda said by phone today.

The Asahi newspaper reported today Italian police found bond certificates concealed in the bottom of luggage the two individuals were carrying on a train that stopped in Chiasso, near the Swiss border, on June 3.

The undeclared bonds included 249 certificates worth $500 million each, the Asahi said, citing Italian authorities. The case was reported earlier in Italian newspapers Il Giornale and La Repubblica and by the Ansa news agency.

If the securities are found to be genuine, the individuals could be fined 40 percent of the total value for attempting to take them out of the country without declaring them, the Asahi said.

The Italian embassy in Tokyo was unable to confirm the Asahi report.

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Italian Police Ask SEC to Authenticate Seized U.S. Treasuries

By Sonia Sirletti and John Glover

June 12 (Bloomberg) -- Italy’s financial police said they asked the U.S. Securities and Exchange Commission to authenticate U.S. government bonds found in the false bottom of a suitcase carried by two Japanese travelers attempting to cross into Switzerland.

The bonds, with a face value of more than $134 billion, are probably forgeries, Colonel Rodolfo Mecarelli of the Guardia di Finanza in Como, Italy, said today. If the notes are genuine, the pair would be the U.S. government’s fourth-biggest creditor, ahead of the U.K. with $128 billion of U.S. debt and just behind Russia, which is owed $138 billion.

The seized notes include 249 securities with a face value of $500 million each and 10 additional bonds with a value of more than $1 billion, the police force said on its Web site. Such high denominations would not have existed in 1934, the purported issue date of the notes, Mecarelli said. Moreover, the “Kennedy” classification of the bonds doesn’t appear to exist, he said.

The bonds were seized in Chiasso, Italy. Mecarelli said he expects a determination from the SEC “within a few days.”

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The Saga Of The Bearer Bonds

It just gets more and more odd after my original report, with the latest coming from a German newspaper (translation courtesy of Google):

Hit for the Zöllner: The contraband securities valued at 134 billion U.S. dollars are apparently real.

Die italienische Finanzpolizei hatte zwei Japaner ertappt, die im doppelten Boden eines Koffers milliardenschwere Anleihen in die Schweiz schaffen wollten.

The Italian financial police had two Japanese caught in the false bottom suitcase billion-dollar bonds in Switzerland wanted to create.

Von dem Fund profitiert das hochverschuldete Italien.

Note that this has received very little coverage in the so-called "mainstream US media" - but it is everywhere in Europe and Asia.
Japan, for its part, oddly said the following as soon as this story started to hit the press:

“We have complete trust in the fact that the U.S. views its strong-dollar policy as fundamental,” Yosano, 70, said in an interview in Tokyo on June 10 before attending a Group of Eight meeting of finance ministers starting today in Italy. “So our trust in U.S. Treasuries is absolutely unshakable.”

Uh huh. And the Japanese said in December of 1941 that all was well too. Anyone remember what happened on the morning of the 7th?
Let's apply a little "Occam's Razor" to this entire story.

You're not going to walk into a bank with $130 billion in bearer bonds and cash them. Nor are you going to sell a bond with a $500 million face value to someone without them authenticating it. They will be authenticated before you get one dime out of them - no matter who you think you're going to "give" them to.

So if they're fakes and you're "just screwing around", there is no reason to hide them. Nor is there any particular reason to have authentic and recent original bank documents in your luggage with them, as has been reported.

Next, unless someone knew you were smuggling them, why would you be subject to that sort of search? What made the people involved "interesting" to the authorities? This doesn't sound like a random stop to me; how many people are carrying $130 billion in bearer bonds at any given point in time? No, someone was tipped off that this was happening. Now why would you bother to stop them here, prior to their attempted delivery of such instruments, if they were fake?

Think about this: You know someone is smuggling a load of drugs. You can either bust them immediately or you can tail them and bust them when they show up at the "meet" to exchange the dope for the money.

If you do the former the guys with the money get away, having committed no crime. But if you do the latter, you get to bust both the courier and the purchaser - two times the effectiveness for the price of one, and double the seizure value, since you get to seize the cash too!

So let's assume that the certificates are real, as German media seems to believe and which, by the way, makes logical sense given what they were and the sheer impossibility of cashing a fake $500 million bond.

Ok, who has $130 billion in bearer bonds? Remember, bearer instruments haven't been issued by the Treasury since 1982, when they became illegal to issue, at least to US institutions and residents (there was an exception carved out for Treasury instruments issued to non-US residents in 1985 - a time of high deficits) The answer to that question: it is rather unlikely that there remains $130 billion of legitimate US Bearer issuance outstanding anywhere - to anyone.

Mr. Holmes would be initially puzzled by such a caper. On the one hand we have the impossibility of the bonds being real, because there simply isn't $130 billion of issues remaining outstanding. On the other hand we have the impossibility of negotiating a fake $500 million bearer instrument, making the exercise of counterfeiting one expensive and futile.

This leaves us with more questions than answers at this point.
Or does it?

As Mr. Holmes is famously rumored to have said, "once you eliminate the impossible, whatever remains, however implausible, must be the truth."
So what remains? Let's run a theory here - one of the few possible remaining options, given the exclusion of what we know not to be true...
Are we willing to assume that all the "issue" of Treasury bonds has been done "above board" as required by law. If Treasury has been surreptitiously issuing bonds to, say, Japan, as a means of financing deficits that someone didn't want reported over the last, oh, say 10 or 20 years, then the following is about to occur:

Who could have possibly been complicit in such a scheme? I can come up with only two nations (and only nations could be involved due to size): The Japanese and Chinese. Since the two individuals who were arrested were reported to be Japanese nationals......
There are tremendous implications in an event like this, again, assuming the bonds are real.

The owner is going to want them back, of course. But Italy is going to keep a third as their statutory penalty for non-declaration on the border. Oops. That's great for Italy, but it blows bananas for the actual owner.

Of course Italy (or the US!) could declare them "fake" and as a consequence simply burn them. If they are in fact real, that's an even bigger problem. See, Bearer Bonds are issued without registration - they are as anonymous as a $100 bill in terms of who owns them. That's one of their "features", and why they were often used for various clandestine money operations. So if they are real and are destroyed, the owner is out of luck - their money is gone just as it is if you burn a $100 bill in an ashtray.

How much is $130 billion in this context? About 1/5th or so of what Japan legitimately owns of US Treasury debt. How would you like to take an instantaneous (and permanent!) 20% haircut on your securities? That's what I thought.

To add some balance here, there have been stories about fake bearer bonds coming out of North Korea and other places for years. But the idiocy of attempting to pass a $500 million certificate belies this possibility - who in the name of God would take such a thing and give you anything for it without authenticating it first? While bearer instrument are "anonymous" in terms of who owns them, their authenticity is easily verified as they ARE serialized instruments.

I remain puzzled, and am not advancing the above theory as fact.
It is, however, one of the few explanations that actually fits the facts, and for that reason, I think we need some answers. If in fact previous administrations were issuing "off-book" Treasury debt in this fashion to sovereigns then implications are truly explosive as such issues are blatant and outrageous unlawful acts and would expose everyone involved to severe criminal penalties.

Let's hope we get those answers, and this isn't one of those "funny things" that just disappears into the night.

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Largest Treasury Bond Caper in History?

June 15, 2009 | From theTrumpet.com

Is someone anonymously dumping treasuries, or is it just the work of a bold counterfeiter? By Robert Morley

U.S. bonds worth an astounding $134.5 billion were seized by Italian police as smugglers attempted to cross into Switzerland earlier this month. Authorities have not indicated if they are real or fake, but either way, it could have implications for the U.S. bond market and the value of the dollar.

AsiaNews is reporting that Italy’s financial police seized bonds worth $134.5 billion from two Japanese nationals at Chiasso, an Italian border city known for catering to Italians who want to keep their money out of the Italian banking system. The confiscations include 249 U.S. Federal Reserve bonds each worth $500 million, plus 10 Kennedy bonds with face values of $1 billion, in addition to various other bonds.

If proven real, it “would be the largest financial smuggling operation in history,” says AsiaNews.

But if the bonds are authentic, it raises the question: Who do they belong to? The high face-values of the bonds are not available in regular banking and financial markets and are typically only handled by states. That would mean that some government is trying to sell a huge chunk of its dollar holdings.

But which? There are very few countries that would be able to move such large amounts. $138 billion is approximately half the total value of all goods and services produced in a year by Iran (which is a major oil exporter). Only three candidates are easily identifiable: Japan, China and the United States.

Although China has been very vocal about diversifying its reserves away from the dollar, since the two foreign nationals arrested were supposedly Japanese, Japan is for obvious reasons the prime suspect.

The Italian daily Adnkronos did not report the official charges against the two nationals, but indicated they may have been detained on suspicion of attempting to take a large amount of securities out of Italy without declaring it.

But why would Japan risk covertly moving tens of billions across country lines in a briefcase with a false bottom? Was this an attempt to quietly unload U.S. treasuries without having to sell them on the open market and risk setting off a market stampede and causing a dollar panic?

“Notice, by the way, that the U.S. media has totally ignored this story—even though the securities in question are allegedly U.S. instruments,” writes Karl Denninger for The Market Ticker. “Might the authorities know they’re real and be just a wee bit nervous that disclosure of a sovereign attempting to covertly dump nearly $140 billion in debt could cause a wee bit of panic, given that we’re running nearly $200 billion a month in deficits?” (June 11).

For now, the jury is still out. The bonds may very well turn out to be forgeries. But even if the bonds are fake, the matter might be even more worrisome, and not just because it would be “the biggest counterfeiting operation ever, by a factor of many times” (ibid.). AsiaNews ominously reports: “[T]he quality of the counterfeit work is such that the fake bonds are indistinguishable from the real ones.”

Picture the Bernie Madoff fraud times two—and that is if this is the only incident.

High-quality fraudulent treasury bonds measured in the hundreds of billions is the last thing the U.S. government needs to deal with right now. The U.S government is attempting to find lenders to finance record spending and stimulus packages to prop up the U.S. economy. Meanwhile, it is trying to convince those same investors that the dollar will not be devalued, and that it is a stable store of wealth. Hundreds of billions of fraudulent securities does nothing to secure that faith.

Students of history will know that various countries have counterfeited currencies of foreign nations to influence currency exchange rates and undermine faith in foreign central banks. Even today, North Korea is known for counterfeiting the U.S. $100 bills. It is possible that something along those lines is occurring here too.

This is a story that deserves watching. The ramifications could be very significant.

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80 billion customs haul to pay off Italys debt

15. 06. 09. - 14:00
croatiantimes.com

Italy may be able to pay off half its national debt this year after two men believed to be Japanese were caught trying to take 81 billion pounds worth of US bonds into Switzerland.

Under Italian law all amounts over 8,500 GBP have to be declared - and if the certificates prove to be genuine Italian customs are entitled to confiscate 40 per cent.

According to Swiss and Italian media, border police in Italy found the bond certificates concealed in the bottom of luggage the two men were carrying on a train stopped in Chiasso near the Swiss border.

The undeclared bonds allegedly included 249 certificates worth 500 million US dollars each.

Takeshi Akamatsu, a spokesman for the Ministry of Foreign Affairs in Tokyo, said: "Italian authorities are in the midst of the investigation and haven't yet confirmed the details, including whether they are Japanese citizens or not."

The incident occurred on 3 June but authorities have only now made the news public.

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Banco Popolare first Italian bank to get state help

Tue Mar 10, 2009 8:21am EDT

* Banco Popolare first to use government support scheme
* To issue 1.45 billion euros of state-backed securities
* Shareholder talks on affiliate Italease in advanced stage
(Adds statements on delisting, Italease)

By Danilo Masoni

MILAN, March 10 (Reuters) - Banco Popolare (BAPO.MI) became the first Italian bank to take up the government's offer of support for its lenders on Tuesday, with newspapers saying it could use the funds to help delist its Italease unit.

Italy's sixth-biggest bank said it had asked the Economy Ministry and the Bank of Italy for permission to issue 1.45 billion euros ($1.83 billion) of securities under a government-sponsored bond-purchasing scheme.

Other leading lenders, including the country's two biggest banks -- UniCredit (CRDI.MI) and Intesa Sanpaolo (ISP.MI) -- have said they would evaluate the programme. Italian newspapers have suggested they could use 3 billion euros each.

"It is an appropriate action, which also in the long-term will guarantee an adequate capitalisation of the group, allowing it to boost support to households, and small and medium businesses," Chief Executive Pier Francesco Saviotti said in a statement.

Italy gave final approval to the scheme on Feb. 25. It is expected to reach some 12 billion euros, a figure dwarfed by bailouts in the United States and Britain.

Banks that take advantage of the guarantees will be obliged to continue lending to small businesses and households as part of the conditions.
Italy's banks have largely avoided the worst of the global financial crisis because of low-risk investing and lending.

UniCredit has been the worst hit as it is the biggest lender in central and eastern Europe. It is boosting capital by 6.6 billion euros outside the government scheme.

STRONG INTEREST
Economy Minister Giulio Tremonti said last week Italian banks had shown "a very strong interest" in the bond-purchasing scheme.
Banco Popolare had a pro forma Core Tier 1 ratio, which measures capital held against risky assets, between 6 percent and 6.5 percent at end-September, about average for Italian banks.

However, its affiliated Banca Italease (BIL.MI), in which Banco Popolare holds 30.7 percent, had to restructure drastically in 2007 as it coped with losses on derivatives. An attempt to find a strategic partner collapsed last year.

Banco Popolare said last week Italease's leading shareholders were discussing possibly delisting the loss-making leasing company. It has a market value of 181 million euros.

Banco Popolare said on Tuesday that talks among the shareholders were at an advanced stage. A solution will be tabled in a "very short period of time", it said in a statement.

Italease said in a separate statement that the economic downturn was hurting the quality of its credit portfolio. A newspaper report that its shareholder equity was wiped out is baseless, it said.

The companies' shares had been suspended from trading pending the statements. Shortly after resuming trade, Banco Popolare was up 3.67 percent at 1.948 euros at 1155 GMT as the DJ Stoxx banks index .SX7P was 7.4 percent firmer.

Italease was down 0.93 percent at 1.065 euro.

Italease said its board would meet on Friday, and a source said Popolare's board would meet on Tuesday.

Il Sole 24 Ore newspaper said on Tuesday that Banco Popolare would buy out the whole of Italease as part of a break-up of the company but would consolidate less than half of its assets, without citing sources.

($1=.7909 euro) (Reporting by Danilo Masoni: writing by Jo Winterbottom; editing by Karen Foster and Andrew Macdonald)

© Thomson Reuters 2009 All rights reserved

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Anything to do with Chrysler?

Summary of the Italian Rescue Plan to Stabilize the Financial Markets

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2 North Koreans carrying $534 billion worth of U.S. bonds detained in Beijing

Monday 15th June, 06:18 AM JST

Beijing: Two North Koreans nationals were detained by Chinese financial police last week after trying to enter Russia with $534 billion worth of undeclared U.S. bonds, mostly Treasury bonds, an Chinese daily said Friday.

The North Korean consulate general in Beijing confirmed that the detention had taken place and said it was trying to confirm with Chinese authorities whether the two were indeed North Korean nationals and their identities.

According to the report in Helong juan, two unidentified North Koreans in their 50s concealed the bonds, including 249 U.S. Treasury bonds each worth $1,000 million, in a suitcase with a false bottom that was searched by the Chinese authorities June 13 when they were in Helong juan, at the border with Russian.

The daily did not say on what charges they have been detained, but the two may have been detained on suspicion of attempting to take a large amount of securities out of China without declaring it because the paper said they had not declared the bonds.

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Medvedev calls for new reserve currencies

2 hours ago

YEKATERINBURG, Russia (AP) — Russian President Dmitry Medvedev says the world needs new reserve currencies.

Medvedev told a regional summit Tuesday that the creation of new reserve currencies in addition to the dollar is needed to stabilize global finances.

Medvedev has made the proposal before. It reflects both the Kremlin's push for greater international clout and a concern shared by other countries that soaring U.S. budget deficits could spur inflation and weaken the dollar.

Airing it at a summit meeting underlined the challenge to U.S. clout.

Medvedev spoke at a summit of the Shanghai Cooperation Organization, which includes China and four Central Asian nations.

Later Tuesday he hosts a summit of the BRIC group of leading emerging economies — Brazil, Russia, India and China.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

YEKATERINBURG, Russia (AP) — Russia played regional power broker Monday, hosting China and Central Asian nations for a summit that highlights the Kremlin's efforts to maintain clout in former Soviet territory and raise its profile in Afghanistan.

Moscow is expected to use the meeting of leaders from the Shanghai Cooperation Organization to try to cement the six-nation group as a counterbalance to the U.S. presence in strategic Central Asia.

Russian President Dmitry Medvedev opened the two-day meeting by saying the group would discuss the global financial crisis as well as the key issue the organization was created to address: regional security.

"Our organization has been created quite recently, but it has scored quite serious progress," he said.

Late Monday, Medvedev had what he called a "most productive and useful" meeting with Afghan President Hamid Karzai and he promised that Russia will help Afghanistan create "an efficient political system."

"We are very thankful for the assistance that Russia has given Afghanistan," Karzai responded, "particularly over the last seven years, during this difficult period of history when we have been fighting terrorism."

At a meeting later with Pakistani President Asif Ali Zardari, Medvedev said all nations needed to work together to fight terrorism — a call he repeated after he, Zardari and Karzai held a final meeting together.

"Many issues including the most difficult challenges our nations are facing today, such as terrorism and crime, can only be fought with collective efforts," Medvedev said. "If we can create efficient workable trilateral mechanism, that will benefit our nations."

The 8-year-old Shanghai Cooperation Organization is dominated by Russia and China and includes Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, with countries such as India, Iran and Pakistan holding observer status.

Medvedev also was expected to meet with Iranian President Mahmoud Ahmadinejad. The Iranian leader postponed his arrival in this Ural Mountains city until Tuesday, according to the Iranian Embassy in Moscow, during protests in Iran over his bitterly disputed re-election.

Amid efforts by Washington and Moscow to improve strained ties, the summit will be watched for signs of stronger support from Russia and its neighbors for American-led operations in Afghanistan. That will be a signal of the depth of Russia's determination to mend fences with the United States at a time of warming relations between the two countries.

While Moscow and its neighbors have stressed solidarity with the West on the need for stability in Afghanistan, Kremlin critics say they have used their combined clout in the past to confound U.S. efforts.

In 2005, the Shanghai Cooperation Organization supported Uzbekistan's eviction of U.S. forces from a base supporting operations in Afghanistan. In February, Kyrgyzstan announced it would evict U.S. forces from their only other Central Asian base — a decision widely seen as influenced by Russia. U.S. officials have said there is still hope for a deal to keep use of the Manas base.

Karzai has appealed to Kyrgyzstan to let coalition forces continue using Manas, and the Afghan leader could meet his Kyrgyz counterpart for talks during the summit.

Kremlin foreign affairs adviser Sergei Prikhodko said Sunday that the Shanghai Cooperation Organization has seen "more transparency" from the administration of President Barack Obama on U.S. policy toward Afghanistan and Pakistan. "The niches of interaction with Western countries, including the U.S., may be widened," he said.

Russia and the Central Asian countries already have allowed the transport of non-lethal military supplies across their territory.

Prikhodko did not say what the nations might do to increase cooperation, but made it clear they want a greater say in resolving the situation in Afghanistan.

Prikhodko also said the leaders will discuss broader security issues and the global financial crisis, as well as the situation on the Korean peninsula, but that no major statement on North Korea's nuclear activity was expected.

The summit will be followed late Tuesday by the first full-fledged summit of BRIC, a group linking the emerging economies Brazil, Russia, India and China.

Medvedev may repeat Russia's call for a new global reserve currency to augment the dollar, but Russia's finance minister over the weekend suggested that the dollar would remain the currency of choice for years to come.

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Keeping a lower profile...
Russia, China, others urge diverse monetary system

THE ASSOCIATED PRESS

Brazilian President Luiz Inacio Lula da Silva, Russian President Dmitry Medvedev,Chinese President Hu Jintao and Indian Prime Minister Manmohan Singh, from left, seen at the first full-fledged summit of Brazil, Russia, India and China, collectively called BRIC, in the Ural Mountains city of Yekaterinburg, Russia, Tuesday, June 16, 2009. Officials from Russia, China and Brazil have said in recent weeks that they would invest in bonds issued by the International Monetary Fund to diversify their dollar-heavy currency reserves. While BRIC members share a desire to play a bigger role in creating a new global financial order and counterbalancing the West and Japan, their often contradictory interests would make forging a common policy a difficult task.(AP Photo/Mikhail Metzel)

YEKATERINBURG, Russia -- Brazil, Russia, India and China on Tuesday called for a more diversified international monetary system, but wrapped up their first full-fledged summit by avoiding any explicit criticism of the world's dominant currency, the U.S. dollar.

The statement issued by the leaders from the so-called BRIC nations contained no reference to developing new reserve currencies to complement the dollar, which Russia had called for at a separate event earlier in the day.

Instead, the cautious wording appeared to reflect China's concerns that any anti-dollar statements could erode the value of its currency reserves.

"There is a strong need for a stable, predictable and more diversified international monetary system," the final statement said.

A reformed financial and economic architecture should be based on "democratic and transparent decision-making and implementation process at the international financial organizations," it said.

The BRIC nations urged the international community to keep the multilateral trading system stable, curb trade protectionism and they stressed a commitment to "advance the reform of international financial institutions to reflect changes in the world economy."

The group repeated long-standing calls that emerging economies like Brazil, Russia, India and China be given greater representation at major institutions like the International Monetary Fund or the World Bank.

The document called for broader cooperation in the energy sphere, diversifying energy resources and energy transit routes.

It also underlined support for a "more democratic and just multipolar world order based on the rule of international law, equality, mutual respect, cooperation, coordinated action and collective decision making of all states."

The wording reflected a longtime call by China and Russia, shared by other developing nations, for a bigger say in global affairs to counter what they see as the U.S. domination in global affairs.

The absence of any criticism of the U.S. dollar appeared to be a compromise by Russia. President Dmitry Medvedev said earlier Tuesday that the creation of new reserve currencies in addition to the dollar was needed to stabilize global finances.

Brazil will host the next summit of the BRIC meeting in 2010.

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Setting up more facets of the the Axis Multipolar World Order
Hu: China to loan regional group $10 billion

YEKATERINBURG, Russia -- Chinese leader Hu Jintao says China will extend a $10 billion loan to a regional group that also includes Russia and four Central Asian states.

The move adds muscle to China's role in the Shanghai Cooperation Organization, which it dominates along with Russia.

Hu spoke at a summit of the grouping in Russia. He said the loan is intended to shore up the struggling economies of its members amid the global financial crisis.

The Shanghai group includes impoverished Tajikistan. Kyrgyzstan, which borders China, also is poor and has few lucrative resources.

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Stocks in HK, Shanghai Decline

Author: Darlington Musarurwa 123jump.com Last Update: 10:46 AM ET June 16 2009

6:00AM New York, 6:00PM Hong Kong – Stocks in China region declined on the global worries and tired rally. China lowers its holdings of U.S. Treasury bonds and also committed to lend $10 billion to members of Shanghai Cooperation Organization. Commodities linked stocks traded lower. Hong Kong stocks declined 1.8% dragged by a contagion of a global stock sell-off sparked by worries contracting manufacturing activity in the U.S. will affect a global economy recovery. Commodity stocks fell as gold and crude oil prices dropped. In Hong Kong trading Hang Seng Index fell 1.8% or 333.46 to 18,165.50, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, declined 1.5% or 161.22 to 10,716.32. In Shanghai trading CSI 300 Index slipped 0.2% or 4.97 to 2,961.22. Daily turnover on main-board increased to HK$76.5 billion from HK$65.3 billion yesterday. Hong Kong’s seasonally adjusted unemployment rate for three months ending in May was unchanged at 5.3% from the period ending in April. The jobless rate was unchanged for the first time in nine months. China to Lend $10 billion to Regional Body Peoples’ Daily Online reported China’s President Hu Jintao said today the country will extend a $10 billion credit line to the Shanghai Cooperation Organization, a regional group that also includes Russia and four Central Asian states. The loan is meant to shore up the economies of SCO members amid the global financial crisis. China Sells $4.4 billion of US Bonds Separately, the online edition noted that U.S. Treasury Department indicated that China’s holdings in U.S. Treasury Bonds have been reduced to $763.5 billion by the end of April from $769.9 billion in March. China’s holdings of U.S. T-bonds have constantly increased since May 2008. The report notes that only Britain continued to purchase U.S. bonds in April. Gainers & Losers The global sell-off of stocks dragged equities lower on concern falling manufacturing activity in the U.S. will affect economic recovery. Falling commodity prices also took their toll on today’s trading. Newly listed Lumena Resources Corp. however soared 19% with shares valued at HK$1.2 billion. Ping An Insurance declined 4.9% on uncertainty over the firm’s plans to increase its stake in Shenzhen Development Bank to 30%. Shenzhen Bank increased 2.7%. China Life declined 2.5% to 25.09 yuan after it reported insurance premium for the first five months of 145.6 billion yuan. Brokerage stocks advanced. CITIC Securities edged up 3.5% on expectations of a resumption of IPOs. Realty stocks tumbled. China Vanke dipped 2.5%. Commodity stocks fell as crude oil prices declined 2% to $70.6 a barrel and gold prices shed 1.4% to $927 per ounce. PetroChina plunged 2.6% and CNOOC slipped 5.5% to HK$9.90. Aluminum Corp of China declined 3.5% and China Coal Energy dropped 4.5%.

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Everyone please remain calm while heading toward the exits...