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G-7 eyes economic policy cooperation for global growth

Kyodo

The finance chiefs of the Group of Seven industrialized economies are likely to confirm this weekend that they will cooperate in steering fiscal and monetary policies for global economic growth, despite criticism by some emerging nations about their drastic credit easing tactics.

Finance ministers and central bank governors from Britain, Canada, France, Germany, Italy, Japan and the United States are also expected to discuss banking regulations to prevent a recurrence of the global financial crisis ushered in by the bankruptcy of U.S. investment bank Lehman Brothers Holdings Inc. in 2008.

The G-7 finance leaders, scheduled to open a two-day meeting Friday in Buckinghamshire near London, plan to exchange views on the global economy at a time when growth in some of the developed countries is slowing, diplomatic sources said.

European nations have been making efforts to restore fiscal health amid the eurozone’s sovereign debt crisis, but they could be called on to take fiscal action in the short term to stimulate their languishing economies, the sources said.

Finance Minister Taro Aso said Tuesday that major economies have to take fiscal and monetary policy measures “in a balanced manner” and indirectly asked Europe to expand fiscal spending.

The Group of 20 finance chiefs in April warned in a communique that global economic growth “has continued to be too weak.”

At the G-7 gathering, Japan and the United States may be urged to draw up medium-term fiscal consolidation plans as the G-20 did last month in Washington.

As for financial regulations, the G-7 finance chiefs may discuss how to coordinate them internationally, since each country has crafted its own measures to strengthen bank surveillance. This has raised concerns that the financial systems of smaller nations will be adversely affected.

Aso, who doubles as deputy prime minister, and Bank of Japan chief Haruhiko Kuroda will be attending their first G-7 financial meeting. They are eager to explain the meaning of “Abenomics,” a term coined to describe the aggressive monetary easing being pursued by the Bank of Japan, the usual big public works projects Japan has been trotting out for decades, and growth strategies that won’t be announced until June, government officials said.

Some economists say that Abenomics stands for “Asset Bubble Economics.”