G7 Weekend Meeting Produces Little

Finance ministers and central bank governors of the Group of Seven industrialised nations (G7) met over the weekend in Rome to discuss the ongoing financial crisis and economic slowdown.

Russia, which has increasingly attended such meetings in recent years (forming the G8), but is not considered a fully developed country, did not participate.

Few new concrete proposals to deal with the "severe global economic downturn and financial turmoil" appeared to come out of the meeting.

Instead the communiquÉ issued at the end of the gathering said: "The stabilisation of the global economy and financial markets remains our highest priority," before listing the government measures used to tackle the crisis so far.

Former chief economist at the International Monetary Fund, Simon Johnson, said the G7 was "asleep at the wheel." Rather than seizing a good opportunity to reassert its leadership he continued, the group had issued a bland communiquÉ of vague intentions.

The UK finance minister, Alistair Darling, said the talks had provided a useful "stepping stone" for the G20 summit in London on 2 April.

One concrete measure at the gathering was Japan's signing of an agreement on Saturday (14 February) to provide €78 billion ($100 billion) to the International Monetary Fund (IMF). Germany, which also runs a trade surplus and holds sizable foreign currency reserves, did not follow suit.

The IMF has recently provided emergency loans to Latvia, Hungry and the Ukraine and there had been fears that its holdings of $142 billion could run out before the end of the year.

The finance ministers and bank governors discussed the issue of protectionism but the final statement merely said: "The G7 remains committed to avoiding protectionist measures, which would only exacerbate the downturn."

The EU is currently struggling to contain a surge in protectionism as fears grow that support plans in certain member states could have negative repercussions on others in the union.

The group also discussed the need for new regulation of the global banking sector, a topic that EU leaders will turn to at their summit in Brussels on 19-20 March.

Italy's Giulio Tremonti called for a "new global order" in this area whereas Peer Steinbrueck, Germany's finance minister, stressed the need to prepare an "exit strategy" from the current high levels of government spending.

One purpose of the meeting was to provide finance ministers with an opportunity to meet the new US treasury secretary, Tim Geithner.

"We had a good impression [of Geithner]. He's a good debater, he's easy to speak to, he's frank and open," commented Jean-Claude Juncker, who also attended the meeting as chairman of the Eurogroup.

Mr Geithner surprised many last month by calling China a currency "manipulator," using strong language that had been avoided by his predecessor Hank Paulson.

The G7 appeared to adopt a softer approach with the statement saying: "We welcome China's fiscal measures and continued commitment to move to a more flexible exchange rate, which should lead to continued appreciation of t

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