Speaking at a lunch in Bangkok, Sakakibara was asked when he thought the US bubble would burst.

"I don't see that happening in the next one to two years," he said.Sakakibara said he believed the US economy could avoid a bubble collapse and manage a soft landing by cooling its economic growth to about 3-4 percent in the next two years from an expected 5-6 percent this year.

"I think that the US Federal Reserve needs to raise interest rates...they need to move cautiously and to manoeuvre in a very subtle way," he said referring to rates moves.

Sakakibara, once Japan's top financial bureaucrat and dubbed "Mr Yen" for his ability to move financial markets, said he was not surprised by current US stock market corrections after sharp rallies in February and March.He said a difference between US and Japanese economic bubbles was that high US economic growth was backed by major innovations in the US information technology sector.

Sakakibara, now a professor at Keio University in Tokyo, was in Thailand to attend an annual meeting of the Asian Development Bank in Chiang Mai, in the North of the country later this week. He repeated criticism of the United States for not providing direct financial assistance to Thailand, South Korea, and Indonesia when they were hit by deep economic crises in 1997 and 1998. The Asian crisis started in Thailand in 1997, and the IMF and US treasury first viewed Thailand's problems as a local phenomenon.

But the turmoil soon spread across Asia and beyond, pushing many countries into recession and high unemployment. Sakakibara, who was a candidate to head the International Monetary Fund, backed proposals for Asia to develop its own integrated debt market and an Asian Monetary Fund (AMF) that could act as a local lender of last resort. Asked if an AMF would help preventa new Asian economic crisis in the future, he said: "It would help. I would not say it could prevent (a new crisis) but it would help (Asia cope with it)."