Saturday, May 21, 2016

G7 finance chiefs remain apart on forex market, coordinated policy

"I think the notion that there would be one response in each of our economies using exactly the same fiscal, monetary, structural policies doesn't reflect what each of our economies needs", U.S. Treasury Secretary Jacob Lew said at a news conference. "In this regard, the G7 supports the related on-going work in FATF [Financial Action Task Force] and Egmont Group [of Financial Intelligence Units], and commits to explore whether there is scope for further improvements", the action plan read.

Japanese Finance Minister Taro Aso said there was no "heated debate" on the yen with Lew, and that it was natural for countries to have differences in how they see exchange-rate moves.

Japan[1] last intervened in currency markets around November 2011, when it tried to stem the yen's rise to keep an economic recovery on track after the quake-tsunami disaster earlier that year.

Today's meeting comes several weeks after Washington placed Japan on a forex watchlist.

Japan, which hosted the meeting this year, is looking to hammer out a new fiscal package in the coming months, but its push for joint fiscal action was rejected by its more cautious peers, who concluded that the group approach the downside risks of the economy with all kinds of options, including monetary policy and structural reforms.

G7 finance ministers on Saturday, May 21, voiced concern about the sputtering global economy as they looked for a plan to stoke growth, while a currency policy clash overshadowed their meetings.

At their bilateral meeting, Aso and Lew shared the view that major countries must refrain from moves such as competing to lower the values of their own currencies to make exports easier.

"Sound global cooperation and information exchange is critical in order to effectively tackle terrorist financing. People are beginning to understand that", Osborne said, winning firm backing from German Finance Minister Wolfgang Schaeuble.

The position emerged that country-specific conditions need to be taken into account. "We had a normal conversation", Aso said. This may reflect the divergent views among the G-7 on whether to unleash extra government spending, as advocated by Japan and Canada, but opposed by Germany.

"It is both disappointing and unexpected that there is a lack of ideas and will to secure new sources of global growth", said Douglas Paal, a vice president at the Carnegie Endowment for International Peace. Japan said its summary didn't purport to be an official consensus.

The G-7 agreed that if United Kingdom voters decide in a June referendum to leave the European Union[2], it would be the wrong decision and hurt the country's economic growth.

The risk of a British vote to exit the European Union in a June referendum, or Brexit, will be high on the agenda at Friday's G7 session on the global economy.

Other discussions included tackling cross border tax evasion and an agreement on new ways to combat terrorist financing. "But we've shared awareness that demand hasn't been strong enough".

As the vote on Britain's future in the European Union draws closer, finance minister George Osborne said his meetings with G7 counterparts underscored the gravity of the in-out decision.

References

  1. ^ Japan (search.news.cn)
  2. ^ European Union (search.news.cn)

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