ID :
45059
Wed, 02/11/2009 - 15:30
Auther :
Shortlink :
http://m.oananews.org//node/45059
The shortlink copeid
G-7 to discuss global financial stability with Obama on board
TOKYO, Feb. 10 Kyodo - Given deepening troubles in the global financial sector and the further slowdown of the world economy, financial chiefs from the Group of Seven industrialized economies will gather in Italy later this week and discuss their battle against the crisis.
The two-day meeting starting Friday in Rome comes as the first G-7 gathering
since U.S. President Barack Obama took office in January, drawing attention on
how the new administration of the United State, the epicenter of the global
credit turmoil, will handle the situation.
The G-7, which also includes Britain, Canada, France, Germany, Italy and Japan,
is expected to review the process it has taken based on an action plan adopted
at its last meeting in October, including pledges to stabilize financial
markets, restore the flow of credit and support global economic growth.
A senior Japanese Finance Ministry official said Tuesday it is likely that the
G-7 will agree that it is necessary to respond to the crisis ''rapidly.'' He
told reporters it would be better if the group of advanced economies can make
it clear that it opposes protectionism in global trade.
From Japan, Finance Minister Shoichi Nakagawa and Bank of Japan Governor
Masaaki Shirakawa will attend the meeting. They will explain the measures the
Japanese government and BOJ have taken in order to fight the crisis, such as
stimulus packages and credit easing.
Nakagawa is to meet bilaterally with new U.S. Treasury Secretary Timothy
Geithner and mainly discuss U.S. responses to the turmoil.
The G-7 will start the meeting with a dinner session Friday also joined by
Russia and chiefs from international organizations including the International
Monetary Fund and the World Bank.
Tokyo has stressed that it is necessary to boost the capital bases of those
international bodies and help developing countries fend off threats to their
growth from the ongoing crisis.
Since the bankruptcy of U.S. investment bank Lehman Brothers Holdings Inc. last
September, the world's financial system and economy have been deteriorating in
a ''negative synergy,'' a BOJ official said.
The G-7 has already discussed and actually taken some actions in various
aspects such as boosting liquidity in financial markets, strengthening the
capital of financial institutions and launching economic stimulus.
At the upcoming meeting in Rome, the G-7 finance ministers and central bank
chiefs will ''confirm their basic recognition and share the direction of the
policies they have taken or will take,'' a source close to the conference said.
They will also discuss developments in the currency market. But the source
said, ''I have not heard that foreign exchange will be discussed as a main
topic.''
The meeting also precedes the summit meeting of Group of 20 advanced and
emerging economies in April in London. There is a widespread view that it is
crucial for the G-7 to work out a united front and lead discussions at the
wider G-20, which also involves China, Brazil and India.
As for financial regulation, there have been proposals for tougher rules on
financial institutions investing in complicated securitized product markets,
huge executive compensation at institutions bailed out by government programs,
and on the use of ratings agencies as a guide for complex debt securities.
Experts say how to control capital market activities remain a crucial problem.
The G-7 ''needs at first to analyze what they had failed,'' said Eiji Hirano, a
former BOJ executive director in charge of international affairs. But he also
warned of possible ''overregulation'' that could destroy the principle feature
of financial markets -- prompting economic growth.
The G-7 meeting comes amid clearer signs that the global economy has been under
pressure stemming from the unsettlement of financial sector.
In its latest economic outlook report released in January, the IMF said the
global economy is expected to grow only 0.5 percent in 2009, the slowest growth
since the end of World War II. It also projected the U.S. economy to shrink 1.6
percent, the eurozone 2.0 percent and Japan 2.6 percent.
As a result, stimulus measures to boost flagging economies have emerged as an
urgent issue for the G-7 nations. But whether to take such fiscal responses
will continue to depend on ''each country's economic conditions,'' said another
conference source.
As the Obama administration started works, the handling of the crisis by the
new U.S. government will be high on the agenda.
''How the United State will react (to the crisis) is one of the main issues,''
said Toyoo Gyoten, a former Japanese vice finance minister for international
affairs.
Gyoten said that the G-7 needs to step up their collaboration in an attempt to
address the crisis but they currently lack ''cohesiveness'' in their policy
reaction. Washington ''should take a leading role, but so far it seems obsessed
with own affairs.''
Analysts point out that such an environment surrounding the world's biggest
economy amounts to a fresh source of concern over protectionism.
The recent news of a proposed ''Buy American'' provision included in a U.S.
economic stimulus bill has sparked anxieties around the world.
Other leading economies including the European Union and Japan have warned of
possible trade litigation if the United State presses ahead with the proposed
requirement for U.S. companies to use domestic steel and manufacturing products
in infrastructure projects funded by the country's forthcoming economic
stimulus package.
However, some experts say it is less likely that the United States will
unstoppably become an ''inward-looking'' country due to the crisis, as many
countries did after the Great Depression began in 1929 and right before they
plunged into war.
They say Washington well recognizes there would be more to lose, rather than to
gain, if it treads the path of protectionism at this time of globalization and
free trade.
The G-7 has agreed in general that protectionism is harmful to global economic
development, said Gyoten.
''One of the focuses of the upcoming meeting is on whether the G-7 could
underline again their anti-protectionism position in their latest statement,''
he said.
The two-day meeting starting Friday in Rome comes as the first G-7 gathering
since U.S. President Barack Obama took office in January, drawing attention on
how the new administration of the United State, the epicenter of the global
credit turmoil, will handle the situation.
The G-7, which also includes Britain, Canada, France, Germany, Italy and Japan,
is expected to review the process it has taken based on an action plan adopted
at its last meeting in October, including pledges to stabilize financial
markets, restore the flow of credit and support global economic growth.
A senior Japanese Finance Ministry official said Tuesday it is likely that the
G-7 will agree that it is necessary to respond to the crisis ''rapidly.'' He
told reporters it would be better if the group of advanced economies can make
it clear that it opposes protectionism in global trade.
From Japan, Finance Minister Shoichi Nakagawa and Bank of Japan Governor
Masaaki Shirakawa will attend the meeting. They will explain the measures the
Japanese government and BOJ have taken in order to fight the crisis, such as
stimulus packages and credit easing.
Nakagawa is to meet bilaterally with new U.S. Treasury Secretary Timothy
Geithner and mainly discuss U.S. responses to the turmoil.
The G-7 will start the meeting with a dinner session Friday also joined by
Russia and chiefs from international organizations including the International
Monetary Fund and the World Bank.
Tokyo has stressed that it is necessary to boost the capital bases of those
international bodies and help developing countries fend off threats to their
growth from the ongoing crisis.
Since the bankruptcy of U.S. investment bank Lehman Brothers Holdings Inc. last
September, the world's financial system and economy have been deteriorating in
a ''negative synergy,'' a BOJ official said.
The G-7 has already discussed and actually taken some actions in various
aspects such as boosting liquidity in financial markets, strengthening the
capital of financial institutions and launching economic stimulus.
At the upcoming meeting in Rome, the G-7 finance ministers and central bank
chiefs will ''confirm their basic recognition and share the direction of the
policies they have taken or will take,'' a source close to the conference said.
They will also discuss developments in the currency market. But the source
said, ''I have not heard that foreign exchange will be discussed as a main
topic.''
The meeting also precedes the summit meeting of Group of 20 advanced and
emerging economies in April in London. There is a widespread view that it is
crucial for the G-7 to work out a united front and lead discussions at the
wider G-20, which also involves China, Brazil and India.
As for financial regulation, there have been proposals for tougher rules on
financial institutions investing in complicated securitized product markets,
huge executive compensation at institutions bailed out by government programs,
and on the use of ratings agencies as a guide for complex debt securities.
Experts say how to control capital market activities remain a crucial problem.
The G-7 ''needs at first to analyze what they had failed,'' said Eiji Hirano, a
former BOJ executive director in charge of international affairs. But he also
warned of possible ''overregulation'' that could destroy the principle feature
of financial markets -- prompting economic growth.
The G-7 meeting comes amid clearer signs that the global economy has been under
pressure stemming from the unsettlement of financial sector.
In its latest economic outlook report released in January, the IMF said the
global economy is expected to grow only 0.5 percent in 2009, the slowest growth
since the end of World War II. It also projected the U.S. economy to shrink 1.6
percent, the eurozone 2.0 percent and Japan 2.6 percent.
As a result, stimulus measures to boost flagging economies have emerged as an
urgent issue for the G-7 nations. But whether to take such fiscal responses
will continue to depend on ''each country's economic conditions,'' said another
conference source.
As the Obama administration started works, the handling of the crisis by the
new U.S. government will be high on the agenda.
''How the United State will react (to the crisis) is one of the main issues,''
said Toyoo Gyoten, a former Japanese vice finance minister for international
affairs.
Gyoten said that the G-7 needs to step up their collaboration in an attempt to
address the crisis but they currently lack ''cohesiveness'' in their policy
reaction. Washington ''should take a leading role, but so far it seems obsessed
with own affairs.''
Analysts point out that such an environment surrounding the world's biggest
economy amounts to a fresh source of concern over protectionism.
The recent news of a proposed ''Buy American'' provision included in a U.S.
economic stimulus bill has sparked anxieties around the world.
Other leading economies including the European Union and Japan have warned of
possible trade litigation if the United State presses ahead with the proposed
requirement for U.S. companies to use domestic steel and manufacturing products
in infrastructure projects funded by the country's forthcoming economic
stimulus package.
However, some experts say it is less likely that the United States will
unstoppably become an ''inward-looking'' country due to the crisis, as many
countries did after the Great Depression began in 1929 and right before they
plunged into war.
They say Washington well recognizes there would be more to lose, rather than to
gain, if it treads the path of protectionism at this time of globalization and
free trade.
The G-7 has agreed in general that protectionism is harmful to global economic
development, said Gyoten.
''One of the focuses of the upcoming meeting is on whether the G-7 could
underline again their anti-protectionism position in their latest statement,''
he said.
