Bessent's Response to Warren: Irregular Yen Movements Increase Interest Rate Risk

US Treasury Secretary Scott Bessent responded to criticisms from Senator Elizabeth Warren, warning that irregular movements in the Japanese yen could destabilize global markets and increase borrowing costs for American families and businesses.

Exchange Stabilization Fund and Swap Transaction

US Treasury Secretary Scott Bessent reported that during last month's intervention in the Japanese yen, the Treasury's Exchange Stabilization Fund foreign exchange assets were swapped for yen.

Minister Bessent emphasized that no loans were provided to Japan during this process and that there was absolutely no new appropriation allocated by Congress.

Statement on Japan's Debt Status

Stating that Japan has no debt to the Treasury, Scott Bessent expressed that there is no risk of the country failing to repay a non-existent debt.

Bessent clarified the process by responding via social media to the critical letter sent by Senator Elizabeth Warren on August 13.

Global Markets and Borrowing Costs

Stating that irregular yen markets could lead to instability on a global scale, Bessent conveyed that this situation would increase borrowing costs for Americans.

Reminding that Japan holds a large amount of US Treasury bonds and is a critical ally, the Minister noted that caution must be exercised against potential risks.

Coordinated Foreign Exchange Market Intervention

US and Japanese officials confirmed earlier this month that they had carried out a coordinated yen intervention.

Japanese Finance Minister Satsuki Katayama also noted that they carried out Japanese yen purchases in full coordination with the US Treasury Department.