'Poor English saved Japan's banks from crisis'

Taro Aso said that bankers in Japan had not been able to understand the complex financial instruments that were the undoing of major global players in the 2008 crisis, so had not bought them.

"Many people fell prey to the dubious products, or so-called subprime loans. Japanese banks were not so much attracted to these products, compared with European banks," Mr Aso told a seminar in Tokyo.

"Managers of Japanese banks hardly understood English, that's why they didn't buy," he said.

It is the latest in a line of eyebrow-raising pronouncements from Mr Aso, who was once prime minister and now also serves as deputy prime minister.

But, the politician - who is known as a dapper dresser - claimed that he had managed to keep his foot out of his mouth since Shinzo Abe came to power in December.

However, his boast was somewhat undermined when he initially got the name of the prime minister wrong.

"I have made no gaffes in the past half year even as newspapers said the Aso administration's... No, the Abe administration's biggest problem is Taro Aso's gaffes," he said.

His comments came as Japan got a welcome dose of upbeat economic news on Friday, when the government said industrial production rose 2pc in May from April, the fourth straight monthly increase.

A nationwide consumer price index also stopped falling for the first time in seven months. Data showed it was unchanged from a year earlier after being in negative territory for six months.

The core CPI figure for June in Tokyo - often used as a predictor for the nation - rose 0.2pc.

For years, Japan has been dogged by deflation, or falling prices, which can drag on economic growth, and the Bank of Japan has set a goal of 2pc inflation within the next two years.

Prime Minister Abe, meanwhile, has embarked on an ambitious economic revival programme since taking office six months ago through massive monetary easing, public works projects and structural reforms - dubbed the "three arrows" of "Abenomics."

Junko Nishioka, an economist at RBS Japan Securities, said she is optimistic that Japan's economy will continue to improve in the coming months.

"Domestic consumer demand is following the growth in industry production," she said. "I think it's the result of a promising economic push."

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