Finance ministers and central bankers from leading industrial nations focused yesterday on measures to stimulate a tentative global economic recovery and calming jittery markets as they launched talks in northern Canada.
Topping the agenda for G7 talks, which some have said would be “frank,” will be growing concerns over eurozone debt as well as the yuan, which China has been accused of keeping deliberately weak to boost exports to the West.
The state of the public coffers in Spain and Portugal have been causing growing unease, with investors fearing a scenario similar to that in Greece.
Greece has been placed under unprecedented EU surveillance as it attempts to implement austerity measures to slash its massive debt and a 12.7 percent public deficit, while Portugal’s deficit hit 9.3 percent last year, its highest since 1974.
“Fundamentally, this is an issue for the EU, but a number of countries represented here are EU countries, so it’s a matter of concern that I’m sure we’ll talk about tonight and tomorrow,” Canadian Finance Minister Jim Flaherty told reporters.
European Central Bank chief Jean-Claude Trichet said on Thursday the high deficit and debt in some countries was placing an “additional burden” on monetary policy and undermining the bloc’s stability and growth pact.
The talks in Canada’s frigid far north would also touch on the timing of “exit strategies” from costly stimulus measures undertaken by G7 member governments, as well as concerns about their combined debts of more than US$30 trillion.
Flaherty said there would also be “major discussions” about the Chinese currency.
“This is an issue that cannot be avoided,” Flaherty said. “It is a G20 issue ... but it is also an issue that concerns Western industrialized countries represented in the G7.”
G7 delegates formally opened their talks on Friday evening at a hotel restaurant in this capital of Canada’s Nunavut territory.
The G7 delegates from Canada, the US, France, Germany, Italy, Japan and Britain were joined by officials from the IMF, the World Bank and the European Commission.
With the G20 taking the lead as the world’s premier economic forum and the rise of China’s economic clout — poised to overtake Japan as the world’s second-biggest economy this year — the G7 is struggling to remain relevant.
Although their economies are more or less stable amid a shaky global recovery, the world’s richest countries are promoting diverging economic and financial policies.
They remain at odds, for example, over how to move forward on a regulatory framework for the banking sector.
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