G-7 finance chiefs agree to play key role for market stability

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IQALUIT, Canada, Feb. 6 Kyodo -
Top finance officials from the Group of Seven industrial powers agreed Saturday
they remain committed to playing a key role in stabilizing the global financial
market, at a time when there are growing concerns over debt woes in Europe and
some differences over ongoing financial-sector regulatory reform.
Canadian Finance Minister Jim Flaherty, who chaired a two-day meeting, said
that the finance leaders of Britain, Canada, France, Germany, Italy, Japan and
the United States agreed that the world economy is improving but pledged to
keep stimulus measures until a solid recovery is established.
''We do not have a firmly established recovery yet, but there are good signs,''
Flaherty said after the meeting in the Arctic town of Iqaluit. ''We need to
continue to deliver the stimulus to which we are committed and begin to look
ahead to exit strategies and to move to a more sustainable fiscal track.''
Flaherty told a joint news conference with his peers that the G-7 agreed to
keep its current framework, despite emerging countries such as Brazil, China
and India having gained significant power in the world economy.
There had been some speculation that the G-7 might end its regular
get-togethers after the meeting in Iqaluit.
But G-7 top financial officials said they will next meet in Washington in
April, as they always do, when there will be an annual spring meeting of the
International Monetary Fund and the World Bank group.
Flaherty said the G-7 officials discussed currency issues ''as usual,'' but
stopped short of entering into details of whether they had addressed the
undervaluation of China's yuan.
Flaherty said the ministers ''maintained the direction established in
Istanbul,'' referring to the previous G-7 meeting in October last year when
they said in a statement, ''We welcome China's continued commitment to move to
a more flexible exchange rate.''
The ministers signaled that they are aware of the need to iron out some of the
differences appearing between them over how to reform the banking sector, amid
worries that regulatory inconsistencies could throw cold water on the nascent
recovery in the global economy.
They also spent a considerable amount of time on debt problems in Greece and
possible side effects elsewhere in the world from massive stimulus measures
implemented since the 2008 economic crisis.
In addition, Flaherty said the G-7 officials are committed to supporting debt
relief for Haiti to help it recover from the devastating earthquake it
suffered.
But the G-7 meeting did not release a joint communique for the first time in
more than a decade, with the intention of returning the regular gathering to
its roots -- the holding of candid and substantive discussions -- in the town
with a population of about 7,000.
''I believe we were able to have real discussions'' that went beyond
superficial exchanges, perhaps because of the informal nature of the meeting,
Japanese Finance Minister Naoto Kan, who attended a G-7 meeting for the first
time, told his own news conference.
French Finance Minister Christine Lagarde said at the joint news conference
that ''coming to the cold and to this beautiful city made the whole thing a lot
warmer,'' referring to the atmosphere of the meeting in Iqaluit, where the
temperature very often falls below minus 30 C in February.
As to the future role of the G-7, which has a history of more than two decades,
member countries believe the size and impact of their capital markets will
continue to be far larger than those of emerging countries for some time, even
though the combined share of the latter's real economies in the world's output
has expanded.
The Group of 20, consisting of the G-7 and emerging heavyweights, became last
year the main forum for discussing economic and financial issues.
But one senior official involved in negotiations of the two groups said, ''It
is very difficult to have real discussions at a G-20 meeting.''
''Too many countries are involved,'' said the official, who spoke on condition
of anonymity. ''Each representative tends to just make a statement during a
G-20 meeting and there is not really much dialogue.''
On the question of how regularly G-7 finance chiefs should meet, some
differences of opinion seem to have emerged in Iqaluit.
Lagarde on Friday night presented a paper to her counterparts containing ideas
on how to change future G-7 meetings, according to Kan.
The paper relates to how France wants to organize G-7 meetings in 2011, Kan
said. France will be the chair of the G-7 and G-20 after Canada.
Kan said no agreement was reached on the G-7's future role during the Iqaluit
talks, which took place in an informal setting and were touted as a
''fireside'' chat, but added that some representatives said there is little
significance in convening a separate meeting back-to-back with a G-20
gathering.
==Kyodo