TOKYO Far-reaching structural reforms, including in the banking system, are the key to Japan's economic recovery rather than a weak yen or debt monetization, IMF Managing Director Horst Koehler said . "With a comprehensive reform concept, the economy will be able to pick up," Koehler told reporters after two days of meetings with Bank of Japan Governor Masaru Hayami and key economic ministers. The International Monetary Fund chief said he welcomed the government's commitment to press ahead with strong fiscal reforms, but urged that it make tackling Japanese banks' bad debt mountain the first priority, AFP reported. Restoring the banking system to health was a pre-requisite to sustained growth," he said. Koehler added that although the yen's depreciation over the last year from about 107 yen to the dollar to 120 yen was "not worrisome", he did not regard it as the solution to Japan's economic woes. "I do not think that a weak yen will and should be the vehicle for overcoming the economic difficulties," he said. A weak yen would help Japanese exporting companies by lowering the price of their products in other currencies, making them more competitive. But Koehler said the root of the problem was not the level of overseas demand, but depressed domestic consumption caused by a crisis of confidence. "The core issue in Japan is the lack of confidence. Japanese citizens are insecure about the future - they need to know that their pensions are secure, that their jobs are secure. They need confidence in their government," he said. Koehler said the record high level of support for the government provided a "window of opportunity" to push through the needed but painful structural reforms. He also encouraged the bank of Japan to follow through "forcefully" with its march 19 decision to effectively return to a zero interest rate policy abandoned last August. "Deflationary forces remain entrenched, and I would encourage the BOJ to implement the new framework forcefully," he said, adding that monetization of the public debt was not the answer to Japan's economic woes either. "I do not think that monetizing the debt will be in the long term the proper solution," Koehler said. "If monetizing the debt is the vehicle, it means that we are not focusing on the main core problem, that is competitiveness and structural reform.''