* No economy can maintain high growth indefinitely-Shirakawa
* Warns on paradox of price stability, financial stability
* Policy-makers must aim for smooth growth transition
(Adds quote, details) By Leika Kihara
TOKYO, Oct 9 (Reuters) - Attempts to maintain high growth beyond a country's potential could cause imbalances, Bank of Japan Governor Masaaki Shirakawa said, warning that no economy can maintain high growth indefinitely.
Excessive optimism about Japan's potential growth and prolonged easy monetary policy created an asset price bubble in the latter half of the 1980s, he told delegates visiting Tokyo for the International Monetary Fund meetings on Tuesday.
"The most important task for policy-makers is to achieve a smooth transition from high growth to stable growth," Shirakawa said in a speech at the central bank.
Shirakawa has long warned of the drawbacks of maintaining unorthodox, ultra-loose monetary policy for too long, pointing to the case of Japan's asset price bubble in the 1980s and the excessive risk-taking by global investors that led to the global financial crisis.
"When price stability is achieved, many economic entities gain the confidence to take more risk. And, as a result, the stability of the financial system is compromised," he said.
The remarks came as major central banks, including the BOJ, continue to pump vast amounts of cash into the banking system, hoping to revive economies still suffering from the aftermath of the global financial crisis.
The IMF cut its global growth forecast for the second time since April and warned U.S. and European policymakers that failure to fix their economic ills would prolong the slump.
The institution also warned that while the BOJ's monetary easing last month should support economic growth and help end deflation, more stimulus may be needed for the country to achieve the central bank's 1 percent inflation target.
The BOJ eased monetary policy for the third time this year in September. It kept policy steady last week, but left the door open to more action later this month, warning of looming risks to the outlook.
(Reporting by Leika Kihara; Editing by Michael Watson an Eric Meijer)
((leika.kihara@thomsonreuters.com)(+813-6441-1828)(Reuters
Messaging: leika.kihara.reuters.com@reuters.net))
Keywords: JAPAN ECONOMY/BOJ