WASHINGTON -(Dow Jones)- Japan's finance minister said Saturday he had proposed to the International Monetary Fund's policy-steering body that the fund sell its gold reserves to cover its falling income.

"Japan has told (the committee): 'Why not sell gold?'" Finance Minister Koji Omi told reporters after attending the International Monetary and Finance Committee's spring meeting in Washington.

Omi's proposal is in line with Japan's long-held stance as well as recommendations made earlier this year by a high-level panel at the IMF. In late January, the panel, chaired by Andrew Crockett, president of JPMorgan Chase & Co. (JPM), urged the fund to sell some of its vast gold reserves and invest the proceeds to raise income.

The fund currently is unable to earn enough revenue to cover its operating costs because of its shrinking loan portfolio. Countries such as Brazil, the Philippines and Uruguay have paid off loans from the fund ahead of schedule, reducing interest payments to the international lender, while fewer nations are seeking the fund's financial support.

Commodities traders have been closely watching the IMF's handling of gold. The fund is the third-largest holder of gold reserves in the world, after the U.S. and German central banks. As of late last year, the IMF said it held 103.4 million ounces of gold.

Omi Saturday also repeated Japan's position that countries shouldn't rely too much on exchange-rate changes as a means of reducing the world's trade imbalances.

"It's important that each country...move ahead with structural reforms and healthy developments, instead of trying to fix global imbalances solely through exchange rates," Omi said.

"The consensus (among the IMFC members) is that (each) individual country ( should) maintain steady developments by resolving its own structural problems and, through that process, mend the world's imbalances," he said.

Earlier, Omi had attended the IMFC's spring meeting. Members of the committee discussed a range of issues, from the fund's battered finances, to the world's economy, to global trade imbalances.

DOW Jones
Takashi Nakamichi

Looks like the news is getting itself ready to be announced to the masses, I wonder how the masses handle it.