G-7 Officials Promise Continued Stimulus
IQALUIT, Nunavut --Group of Seven financial leaders Saturday tried to tamp down continued anxiety about the global economic recovery, with officials promising continued stimulus efforts and European leaders pledging to address public debt problems.
The debt crisis in Europe, triggered by ongoing problems in Greece and other euro-zone countries, placed a brighter spotlight on the G-7 meeting here, prompting European leaders to say they are aggressively monitoring and addressing the debt situation.
"We expect and are confident that the Greek government will make all the necessary decisions," said Jean-Claude Trichet, the European Central Bank president. Trichet added European members of the G-7 will "continue to monitor closely the implementation of these stability measures."
Canadian Finance Minister James Flaherty lent the Europeans a hand, saying Greece's economy was of relatively small size. "So in global terms it's not of intense concern," he said.
G-7 financial leaders also said they will continue providing support to their economies until the financial recovery has taken firm hold.
"We are committed to maintaining support to the economy," U.K. Chancellor of the Exchequer Alistair Darling said. "We are confident that we are going in the right direction although we remain cautious."
The G-7, which represents the major European and North American economies and Japan, said the global economy has improved but the financial recovery remains tentative.
U.S. Treasury Secretary Timothy Geithner said European financial leaders were clear with the G-7 that they would manage the Greece situation with great care. He struck an optimistic tone about the economic recovery, despite mixed signals about the U.S. recovery. "The recovery came more quickly and stronger than expected," he said.
he G-7 also discussed financial sector regulation and how to have the banking sector help pay costs stemming from the financial crisis, but disagreement remained on exactly how, officials said. Geithner, who came peddling a U.S. proposal to assess fees against financial firms, said G-7 leaders are committed to overhauling financial regulation "in ways that don't undermine prospects for recovery."
Jean-Claude Juncker, chairman of the group of euro-zone finance ministers, said the G-7 agreed to leave unchanged their assessment of world currency markets. He added that the G-7's statement on currencies in its Oct. 3 communique released in Istanbul--a document that directly addresses China's manipulation of its currency--remains valid.
French Finance Minister Christine Lagarde said the strengthening U.S. dollar against the euro could be a positive development for the European economy. "We always complained about the dollar not being strong enough," Lagarde said. "That is clearly an improvement."
The G-7 has recently become overshadowed by the larger Group of 20, which also represents large emerging economies such as China, India and Brazil.
G-7 financial leaders said they will continue meeting despite being supplanted by the G-20, but will do so in a more informal fashion that won't regularly include the release of cooperative statements. Flaherty, the Canadian finance minister, said G-7 nations remain powerful players in the world economy that can act as "first responders" during a financial crisis. But leaders were careful to underscore the continued importance of the entity even as questions of its relevance swirl.
The G-7 meeting in Canada's northern territory 1,300 miles north of Ottawa was decidedly different. Police presence was low-key. Security personnel at the Frobisher Hotel, where some of the delegations were staying, stood guard alongside native Inuit who were selling seal brooches and stone carvings to hotel visitors.