By Yonggi Kang
TOKYO, Oct 23 - Japanese Economics Minister Heizo Takenaka said on Tuesday that redenominating the yen was an "important option" as part of the government's structural reforms.
"I've been thinking that (a redenomination of the yen) would be an important option," Takenaka told reporters.
He said the time was ripe for the government to consider redenominating its currency as the risk of businesses taking advantage of such a change to hike prices had abated given Japan's struggle with deflation.
Redenomination has long been a topic of debate among politicians and economists, some of whom say it could help stimulate Japan's flagging economy.
Proponents have suggested that 100 yen could be changed to one new yen, putting the yen's denomination in line with the dollar and the euro. Under the new system, the dollar would be worth about 1.22 yen and the euro about 1.09 yen at current prices.
"Reforms mean bringing changes and making new history for Japan, so it would be meaningful from that standpoint," Takenaka said.
"I'm not saying we can do it tomorrow, but there is room to discuss (redenominating the yen) as structural reforms progress," he added.
CONVERTIBLE GOVERNMENT BONDS
Takenaka also said Japan could use its assets, including its holdings of shares in Nippon Telegraph and Telephone Corp <9432.T>, as a way to issue convertible government bonds for funding purposes.
"Selling Japan's assets would be an important point. I've been thinking about this, but there could be a possibility of convertible government bonds just like there are convertible corporate bonds," he said.
Takenaka warned that issuing more Japanese government bonds (JGBs) without restraint would cause bond prices to plunge, hence pushing up interest rates to alarming levels -- a trend that could damage an economy already on the brink of recession.
Asked whether he would propose it to Prime Minister Junichiro Koizumi's economic panel, Takenaka said: "This is my personal opinion and we haven't studied its feasibility. But I do intend to express my thought that it could be an option."
Koizumi has promised to keep issuance of government bonds below 30 trillion yen ($245.3 billion) in order to restructure Japan's debt-laden public finances -- worst among industrialised countries. ($1=122.30 Yen)