G-7 Finance Chiefs to Focus on Global Market Turmoil, but No Policy Remedies Expected.
When Group of Seven finance ministers and central bank chiefs meet this weekend in Tokyo, market turmoil and the risks of a global slowdown will be at the top of their agenda. But senior ministers from Japan and Britain dashed any hopes that Saturday's meeting will produce any sweeping policy agreements -- such as a unified move to cut interest rates -- to remedy market instability.
"Economic conditions differ among the U.S., Europe and Japan," Japanese Finance Minister Fukushiro Nukaga told reporters Friday. "It is important ... that each country makes its own best efforts regarding how to restore and stabilize its economy."
British Treasury chief Alistair Darling echoed that idea. "The actions that the U.S. Federal Reserve and President Bush have taken are appropriate to the U.S.," Darling said separately in Tokyo. "Other countries are not in that position and will take appropriate action for their own economies."
World financial markets have been battered since the start of the year amid worries about a possible U.S. recession and uncertainty about the full extent of the subprime mortgage crisis that has led to billions of dollars in losses at major banks.
How the U.S. has been dealing with the credit crunch is expected to be a key discussion topic. Nukaga, who will play host to the gathering, said the G-7 industrialized nations -- the U.S., Japan, Germany, Britain, France, Italy and Canada -- may urge financial institutions to disclose more information about the losses they have suffered from the crisis.
The senior officials will hear a preliminary report from a panel of experts led Mario Draghi, the head of Italy's central bank, who were asked by the G-7 last fall to study the market turbulence and make recommendations on what should be done.
U.S. Treasury Secretary Henry Paulson will talk about the U.S. economic stimulus plan, said David McCormick, the department's undersecretary for international affairs. On Thursday, Congress passed a $168 billion package of tax rebates for American consumers, business tax write-offs and other measures to shore up the sagging economy.
Fed Chairman Ben Bernanke will also attend the gathering. Nukaga said he hoped the officials could send a joint message to stock exchanges "through international cooperation" to calm jittery markets, without elaborating. But a unified cross-continental policy announcement -- such as cutting interest rates together, as speculated among some traders -- appears highly unlikely.
"We're not opposed to moving in a prescriptive way on policy where it's appropriate," McCormick of the U.S. Treasury said earlier this week. "But we don't want to move too quickly before all the facts are in and we have a clear sense of how we can best address some of these challenges." The Fed slashed a key U.S. interest rate by 1.25 points to 3 percent late last month, and investors speculate that more cuts may be coming.
On Thursday, the Bank of England cut its rate a quarter point to 5.25 percent. Darling said the BOE had been able to cut interest rates because inflation in the Britain remains closest to the government's target of 2 percent. "I remain very confident that the British economy will get through the current uncertain times," he said.
The European Central Bank, which sets policy for the euro-zone, appears to be leaving the door open for a rate cut, but it is unlikely to take as drastic a move as the U.S. because of inflation concerns.
The Bank of Japan is even less capable of action with its key rate at 0.5 percent. Until last year, Japan had been trying to figure out when to raise -- not lower -- interest rates. "It's so clear from the conditions that they won't be able to come up with any major agreement on what to do," said Yasuhide Yajima, senior economist at NLI Research Institute in Tokyo. "All they can do is talk in generalities."
Finance chiefs from China, Russia, South Korea and Indonesia are expected to join the G-7 officials at a dinner Saturday to expand the discussions. As in previous meetings, participants are expected to echo earlier urges for a more flexible Chinese currency.
Japan is also expected to bring up this weekend the idea of a multilateral fund to help poor nations to curb global warming. Tokyo has said it will push such climate change efforts at a July meeting in Hokkaido of the Group of Eight, or the G-7 plus Russia.
Darling said how industrialized nations can support developing nations in battling climate change is critical. "It's clear if we don't do that, there will be a massive economic as well as social cost," he told reporters during a visit to the Tokyo Stock Exchange.
When Group of Seven finance ministers and central bank chiefs meet this weekend in Tokyo, market turmoil and the risks of a global slowdown will be at the top of their agenda. But senior ministers from Japan and Britain dashed any hopes that Saturday's meeting will produce any sweeping policy agreements -- such as a unified move to cut interest rates -- to remedy market instability.
"Economic conditions differ among the U.S., Europe and Japan," Japanese Finance Minister Fukushiro Nukaga told reporters Friday. "It is important ... that each country makes its own best efforts regarding how to restore and stabilize its economy."
British Treasury chief Alistair Darling echoed that idea. "The actions that the U.S. Federal Reserve and President Bush have taken are appropriate to the U.S.," Darling said separately in Tokyo. "Other countries are not in that position and will take appropriate action for their own economies."
World financial markets have been battered since the start of the year amid worries about a possible U.S. recession and uncertainty about the full extent of the subprime mortgage crisis that has led to billions of dollars in losses at major banks.
How the U.S. has been dealing with the credit crunch is expected to be a key discussion topic. Nukaga, who will play host to the gathering, said the G-7 industrialized nations -- the U.S., Japan, Germany, Britain, France, Italy and Canada -- may urge financial institutions to disclose more information about the losses they have suffered from the crisis.
The senior officials will hear a preliminary report from a panel of experts led Mario Draghi, the head of Italy's central bank, who were asked by the G-7 last fall to study the market turbulence and make recommendations on what should be done.
U.S. Treasury Secretary Henry Paulson will talk about the U.S. economic stimulus plan, said David McCormick, the department's undersecretary for international affairs. On Thursday, Congress passed a $168 billion package of tax rebates for American consumers, business tax write-offs and other measures to shore up the sagging economy.
Fed Chairman Ben Bernanke will also attend the gathering. Nukaga said he hoped the officials could send a joint message to stock exchanges "through international cooperation" to calm jittery markets, without elaborating. But a unified cross-continental policy announcement -- such as cutting interest rates together, as speculated among some traders -- appears highly unlikely.
"We're not opposed to moving in a prescriptive way on policy where it's appropriate," McCormick of the U.S. Treasury said earlier this week. "But we don't want to move too quickly before all the facts are in and we have a clear sense of how we can best address some of these challenges." The Fed slashed a key U.S. interest rate by 1.25 points to 3 percent late last month, and investors speculate that more cuts may be coming.
On Thursday, the Bank of England cut its rate a quarter point to 5.25 percent. Darling said the BOE had been able to cut interest rates because inflation in the Britain remains closest to the government's target of 2 percent. "I remain very confident that the British economy will get through the current uncertain times," he said.
The European Central Bank, which sets policy for the euro-zone, appears to be leaving the door open for a rate cut, but it is unlikely to take as drastic a move as the U.S. because of inflation concerns.
The Bank of Japan is even less capable of action with its key rate at 0.5 percent. Until last year, Japan had been trying to figure out when to raise -- not lower -- interest rates. "It's so clear from the conditions that they won't be able to come up with any major agreement on what to do," said Yasuhide Yajima, senior economist at NLI Research Institute in Tokyo. "All they can do is talk in generalities."
Finance chiefs from China, Russia, South Korea and Indonesia are expected to join the G-7 officials at a dinner Saturday to expand the discussions. As in previous meetings, participants are expected to echo earlier urges for a more flexible Chinese currency.
Japan is also expected to bring up this weekend the idea of a multilateral fund to help poor nations to curb global warming. Tokyo has said it will push such climate change efforts at a July meeting in Hokkaido of the Group of Eight, or the G-7 plus Russia.
Darling said how industrialized nations can support developing nations in battling climate change is critical. "It's clear if we don't do that, there will be a massive economic as well as social cost," he told reporters during a visit to the Tokyo Stock Exchange.
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