Finance ministers from the Group of Eight wealthiest nations began arriving yesterday at a resort outside Berlin to hammer out issues such as the influence of hedge funds and the weakening dollar.
The gathering took place a day after embattled World Bank President Paul Wolfowitz resigned from his post, ending a long struggle that pitted the US against European members of the bank.
The battle over his resignation had threatened to overshadow the meeting. With the issue resolved, the G-8 could instead focus yesterday on talks with their African counterparts from South Africa, Nigeria, Ghana, Mozambique and Cameroon on stability, laying a framework ahead of the major summit on June 6-8 in Heiligendamm.
On paper, the finance officials from Britain, Canada, France, Germany, Italy, Japan, the US and Russia were to review the global economy, with a focus on hedge funds -- international investment vehicles largely for the wealthy -- the primary issue.
Concerns about foreign currency exchange rates -- the rising euro, weak US dollar and China's yuan -- are likely to be talked about as well but on the sidelines.
German officials have made tighter supervision of hedge funds a focus and have been agitating for a voluntary code of conduct in the light of the rapid expansion of the funds, which carry high risks and are often exempt from rules and regulations.
The debate became more political in Germany after a hedge fund forced Deutsche Boerse chief executive Werner Seifert to step down in 2005 in a dispute over the German stock exchange's attempt to take over the London Stock Exchange. Labor Minister Franz Muentefering of the Social Democrat Party likened hedge funds to locusts.
But the issue is contentious with some G-8 members, including Britain and the US, who are on the fence over such a code.
Clay Lowery, the assistant US treasury secretary for international affairs, said on Wednesday he believed disagreements had been overemphasized in media reports. He said he believed common ground could be found among the ministers this weekend.
"There probably is not as much disagreement as people have made it out to be," Lowery said, adding the US still held the view that a code of conduct was unnecessary.
"We think that industry best practices is probably the best way to get to better market discipline," he said.
Any talk of foreign exchange rates will be on the sidelines of the meeting, the ministry said, since central bankers will not be attending this time.
Last month, a statement from the Group of Seven finance ministers and central banks said that "excess volatility and disorderly movements in exchange rates are undesirable for economic growth."
Since then, the dollar has fallen to a record low against the euro of US$1.3682 on April 27 and hit 27-year lows against the British pound as well as new lows versus the Chinese yuan.
Masato Miyazaki, an official in charge of the Japanese Finance Ministry's section on international organizations, said his country is likely to stress the need to fight global warming and conserve energy.
"We will likely reiterate our position that it's important to save energy, set up a post-Kyoto framework because it is meaningless without the participation of the US, China and India," he said.
The meeting will take place without US Treasury Secretary Henry Paulson, who will be staying in Washington to focus on meetings with Chinese officials next week. Deputy US Treasury Secretary Robert Kimmitt will attend instead.
France has not said if it will send a representative. New President Nicolas Sarkozy's finance minister was expected to be named yesterday with the rest of the Cabinet.
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