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Japan not setting up wealth fund: Tsuda

Japan has no plans to establish a sovereign wealth fund to increase returns on its foreign reserves, Vice Finance Minister Hiroki Tsuda said.

"The most important factors for foreign-reserve management are security and liquidity, and we seek returns bearing them in mind as much as possible," Tsuda, the ministry's top-ranked bureaucrat, told reporters in Tokyo yesterday.

The ministry has been under pressure from some politicians and academics to diversify its investments to improve returns. Japan's US$954.5 billion foreign reserves are the world's second largest after those of China, which has set up a fund to manage part of its more than US$1.43 trillion in reserves.

Returns on Japan's reserves of foreign currency-denominated securities and bank deposits improved to 4 percent last year as interest payments rose, the finance ministry said on Wednesday in figures disclosed for the first time to improve transparency.
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