US Treasury Defends Yen Intervention, Calls Senator 'Financially Illiterate'

U.S. Treasury Secretary Scott Bessent has forcefully pushed back against criticism of the Treasury's intervention in the Japanese yen market, directly accusing Senator Elizabeth Warren of lacking "basic financial literacy" on currency markets. Bessent's strong response came in a letter addressed to Warren, who had questioned the benefits of preventing turmoil in Japan's economy for the United States.

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The best-managed crisis is the one that never happens.

In his reply, Bessent clarified that the Treasury's Exchange Stabilization Fund swapped foreign exchange assets with yen. He stressed that this operation did not involve any new appropriation from Congress and, crucially, that no credit was extended to Japan. "Japan owes the Treasury no debt. Therefore, there is no risk of Japan defaulting on a non-existent debt," Bessent stated, directly refuting any implication of a bailout.

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Disorderly yen markets could trigger forced position liquidations, potentially destabilizing global markets and ultimately raising borrowing costs for American families and businesses.

Bessent highlighted Japan's significant holdings of U.S. Treasury bonds, its status as a critical trade partner, and a key ally. He warned that disorderly yen markets could trigger forced position liquidations, potentially destabilizing global markets and ultimately raising borrowing costs for American families and businesses. He drew a parallel to Argentina, where the Treasury used the Exchange Stabilization Fund to stabilize short-term liquidity and prevent a wider regional crisis.

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Japan owes the Treasury no debt. Therefore, there is no risk of Japan defaulting on a non-existent debt.

"The best-managed crisis is the one that never happens," Bessent wrote, implying that Warren viewed preventable crises as opportunities to expand government control rather than failures to be averted. The U.S. and Japan had previously confirmed a coordinated intervention in the yen earlier this month, with Bessent stating that further joint market interventions could occur if necessary.

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basic financial literacy