Finance Minister Taro Aso expressed wariness Tuesday that the U.S. budget impasse will cut the value of U.S. Treasuries Japan holds, indicating he will call for an early settlement of the issue at a Group of 20 gathering later this week.
Aso's remarks come amid growing concern that failure to meet the Oct. 17 deadline for raising the U.S. federal government's debt ceiling would trigger a default on the country's debt.
The budget standoff "is likely to affect the global economy across the board through financial markets," he told a press conference.
With regard to intensifying fears that U.S. government bonds may be downgraded, "We have to consider the risk that prices of U.S. Treasuries Japan holds will decrease," he added.
As of July, Japan holds $1,135.4 billion of U.S. Treasuries, as the second-biggest holder of the bonds after China, which has $1,277.3 billion of them, according to the U.S. Treasury Department.
The U.S. government has already suspended various operations since last Tuesday, the start of fiscal 2014, after Congress failed to pass a budget for the new fiscal year. The uncertainty over the U.S. budget and debt ceiling has recently driven down the dollar and weighed on stocks across the globe.
"We hope the problem will be solved without delay," Aso said.
The finance minister also said he will exchange views on the budget crisis with U.S. Treasury Secretary Jack Lew on the occasion of the two-day meeting of G-20 finance chiefs in Washington starting Thursday.