How the US Helped Japan Pull Off a $97 Billion Yen Rescue

Treasury Secretary Scott Bessent clarified that the United States did not lend Japan any money during a recent yen rescue operation. Instead, the U.S. purchased yen, and Japan now owes the Treasury nothing, eliminating any risk of default. Senator Elizabeth Warren had previously warned that taxpayers would bear the cost if Japan failed to repay the yen intervention.

However, Treasury's monthly filings strongly support Bessent's explanation, weakening Warren's broader argument. The Exchange Stabilization Fund, a reserve account at the Treasury, is used for this type of intervention and can be accessed without congressional approval. Its foreign currency holdings include euros and yen, with $2.57 billion in yen on June 30.

The U.S. was concerned because Japan holds $1.12 trillion in U.S. debt, making it vulnerable to a yen panic.