TOKYO - JAPAN will propose the creation of a new scheme under the auspices of the International Monetary Fund (IMF) that would mobilise countries' foreign currency reserves to help fund emergency loans to emerging nations facing financial crises, the Nikkei business daily reported on Friday.

Tokyo will make the proposal at a meeting of finance ministers and central bank chiefs from Group of Seven (G7) advanced countries in Washington on Friday, the newspaper said, without quoting specific sources.

The scheme would be directed at small and mid-sized emerging countries, not G7 members or other large nations, it added.

Under the plan, the IMF would ask the country that was to receive the funds to draw up a plan for revitalising its financial sector including writing off its bad assets.

The new emergency loans would be funded by the approximately 200 billion yen (S$3 billion) contributed by IMF member countries plus loans from the foreign currency reserves of countries such as Japan, China and oil-rich Middle Eastern countries, the paper said. -- THOMSON REUTERS