G7 meeting to address subprime, credit crunch concerns

by Yasushi Azuma

Kyodo News

Group of Seven financial chiefs will rack their brains to find ways to quell fears of a credit crunch stemming from the U.S. subprime mortgage loan problem and prevent a recurrence of such ills when they gather for a regular meeting in Washington next week.

Market players are also closely watching how finance ministers and central bank governors from the G7 industrialized countries will assess the current state of the global economy and the outlook amid lingering effects of the subprime loan-linked turmoil in global financial markets.

Recent surges in crude oil prices have also loomed as a risk to the global economy and the financial leaders from Britain, Canada, France, Germany, Italy, Japan and the United States are also likely to discuss the matter during the one-day meeting, Japanese officials said.

The Oct. 19 G7 meeting will be held on the sidelines of a spate of conferences of the International Monetary Fund and the World Bank in the U.S. capital.

From Japan, Finance Minister Fukushiro Nukaga and Bank of Japan Gov. Toshihiko Fukui are scheduled to attend the meeting.

Among key topics regarding the subprime mortgage loan issue are risk management in complicated financial products, how to treat these products in accounting, the role of credit-rating agencies in the securitized products market and appropriate supervision of financial entities dealing with securitized products, the officials said.

The Financial Stability Forum, which advises the G7 financial chiefs, is expected to submit an interim report on the points to the G7 meeting. Following the report, the G7 financial chiefs will debate the topics further.

But the G7 financial leaders are expected to weigh a compromise on the issue.