Loading
Search
▼ G-7 Finance Chiefs Agree to Underpin Global Economy
- Category:Other
By Shinichi Ikeda / Japan News Staff Writer
SENDAI — Finance ministers and central bank governors from the Group of Seven major countries agreed on Friday to aim for global economic growth by fully employing three measures — monetary policy, fiscal stimulus and structural reform.
The G-7 leaders, following in the footsteps of the finance ministers, are expected to affirm during the Ise-Shima summit scheduled for May 26 and 27 that their countries will fully utilize these three policy tools.
The finance ministers and central bank chiefs from the G-7 countries kicked off their two-day talks on Friday in Sendai, where rebuilding is progressing following the 2011 Great East Japan Earthquake and ensuing tsunami. The first day of their talks focused on how to support the global economy.
In addition to revitalizing the global economy, key items on the agenda at the meeting include how to build a resilient global financial architecture and sustain inclusive development, and the integrity of cross-border financial flows, namely tackling issues regarding tax havens and terrorist funding.
Japan, the host country of the meeting, is represented by Finance Minister Taro Aso and Bank of Japan Gov. Haruhiko Kuroda. The nation is taking the initiative in the talks regarding a balanced approach similar to the Abenomics economic policy package. The main pillars of Abenomics — called the “three arrows” — are bold monetary easing, flexible fiscal stimulus and growth strategy.
After Friday’s talks, Aso stressed that the G-7 countries need to underpin the global economy. “There remains uncertainty in the global economy,” Aso told reporters. “A lack of demand is the biggest problem.”
Aso also said Japan will take the initiative in deploying fiscal stimulus measures, while he understands some other countries are cautious about it.
“There are countries that can undertake fiscal stimulus measures and others that cannot,” Aso said. “There are things Japan should do to spur demand.”
While some policy makers suspect that it will be difficult to boost the country’s economy using just the BOJ’s quantitative and qualitative easing (QQE) measures and negative interest rate, the Japanese government had been hoping to gain approval from other G-7 countries regarding flexible deployment of fiscal stimulus measures. The Japanese government believes this will also help boost the global economy.
Germany and Britain, which attach importance to fiscal discipline, are reluctant toward fiscal stimulus. During Friday’s talks, however, all G-7 finance ministers shared the view that they need to unite to execute a combination of structural reform, monetary policy and fiscal stimulus — albeit based on their countries’ individual circumstances — in the aim of global economic growth.
After the Group of 20 finance ministers and central bank governors met in Washington in April, a communique was issued stating: “We will continue to explore policy options, tailored to country circumstances.”
On Friday, the finance ministers also agreed to avoid competitive currency devaluation whereby countries intentionally devalue their currencies to boost exports.
“Stabilizing exchange rates is extremely important,” Aso told reporters after Friday’s talks, referring to excessive exchange rate fluctuations. “Japan is committed to avoiding competitive currency devaluation,” he added.
Aso will meet with U.S. Treasury Secretary Jack Lew on Saturday morning. They are expected to discuss the recent appreciation of the yen.
During a press conference held on Thursday, Kuroda warned of excessive appreciation of the yen. “I will not hesitate to take further easing measures if it becomes necessary to prevent a negative impact on our process for achieving stable prices.”
During the long Golden Week holiday period in May, the yen rapidly strengthened against the dollar. A senior official of the U.S. Treasury Department said exchange markets in recent months have been orderly. That comment was in contrast to the view of Japanese officials.
The ministers are also expected to agree that the G-7 countries will take the lead in strengthening measures to cope with tax avoidance. Following the release of the Panama Papers, which revealed in detail the use of tax havens, addressing international tax avoidance has become an important part of the agenda at the Sendai meeting.
The ministers are also expected to compile an action plan to strengthen measures against the financing of terrorism.
SENDAI — Finance ministers and central bank governors from the Group of Seven major countries agreed on Friday to aim for global economic growth by fully employing three measures — monetary policy, fiscal stimulus and structural reform.
The G-7 leaders, following in the footsteps of the finance ministers, are expected to affirm during the Ise-Shima summit scheduled for May 26 and 27 that their countries will fully utilize these three policy tools.
The finance ministers and central bank chiefs from the G-7 countries kicked off their two-day talks on Friday in Sendai, where rebuilding is progressing following the 2011 Great East Japan Earthquake and ensuing tsunami. The first day of their talks focused on how to support the global economy.
In addition to revitalizing the global economy, key items on the agenda at the meeting include how to build a resilient global financial architecture and sustain inclusive development, and the integrity of cross-border financial flows, namely tackling issues regarding tax havens and terrorist funding.
Japan, the host country of the meeting, is represented by Finance Minister Taro Aso and Bank of Japan Gov. Haruhiko Kuroda. The nation is taking the initiative in the talks regarding a balanced approach similar to the Abenomics economic policy package. The main pillars of Abenomics — called the “three arrows” — are bold monetary easing, flexible fiscal stimulus and growth strategy.
After Friday’s talks, Aso stressed that the G-7 countries need to underpin the global economy. “There remains uncertainty in the global economy,” Aso told reporters. “A lack of demand is the biggest problem.”
Aso also said Japan will take the initiative in deploying fiscal stimulus measures, while he understands some other countries are cautious about it.
“There are countries that can undertake fiscal stimulus measures and others that cannot,” Aso said. “There are things Japan should do to spur demand.”
While some policy makers suspect that it will be difficult to boost the country’s economy using just the BOJ’s quantitative and qualitative easing (QQE) measures and negative interest rate, the Japanese government had been hoping to gain approval from other G-7 countries regarding flexible deployment of fiscal stimulus measures. The Japanese government believes this will also help boost the global economy.
Germany and Britain, which attach importance to fiscal discipline, are reluctant toward fiscal stimulus. During Friday’s talks, however, all G-7 finance ministers shared the view that they need to unite to execute a combination of structural reform, monetary policy and fiscal stimulus — albeit based on their countries’ individual circumstances — in the aim of global economic growth.
After the Group of 20 finance ministers and central bank governors met in Washington in April, a communique was issued stating: “We will continue to explore policy options, tailored to country circumstances.”
On Friday, the finance ministers also agreed to avoid competitive currency devaluation whereby countries intentionally devalue their currencies to boost exports.
“Stabilizing exchange rates is extremely important,” Aso told reporters after Friday’s talks, referring to excessive exchange rate fluctuations. “Japan is committed to avoiding competitive currency devaluation,” he added.
Aso will meet with U.S. Treasury Secretary Jack Lew on Saturday morning. They are expected to discuss the recent appreciation of the yen.
During a press conference held on Thursday, Kuroda warned of excessive appreciation of the yen. “I will not hesitate to take further easing measures if it becomes necessary to prevent a negative impact on our process for achieving stable prices.”
During the long Golden Week holiday period in May, the yen rapidly strengthened against the dollar. A senior official of the U.S. Treasury Department said exchange markets in recent months have been orderly. That comment was in contrast to the view of Japanese officials.
The ministers are also expected to agree that the G-7 countries will take the lead in strengthening measures to cope with tax avoidance. Following the release of the Panama Papers, which revealed in detail the use of tax havens, addressing international tax avoidance has become an important part of the agenda at the Sendai meeting.
The ministers are also expected to compile an action plan to strengthen measures against the financing of terrorism.
- May 21, 2016
- Comment (0)
- Trackback(0)