FUKUOKA — Finance ministers from the Group of Seven economic powers agreed Saturday that governments need to maximize the benefits of the information technology revolution and minimize the risks through deregulation and coordinating their regulatory policies.
The G7 finance chiefs also agreed on specific measures to reform the International Monetary Fund, a crucial step that will strengthen the international financial system and is designed to prevent financial crises.
They also renewed their commitment to debt relief programs for the world’s poorest countries and the international fight against money laundering and other abuses of the global financial system.
Finance Minister Kiichi Miyazawa and his G7 counterparts exchanged opinions during the afternoon conference here as a prelude to the Group of Eight summit in Okinawa on July 21 and 23.
The G7 groups Britain, Canada, France, Germany, Italy, Japan and the United States. The G8 is the G7 plus Russia.
As well as the four major topics on the agenda, the finance chiefs also reviewed the economic outlook for Japan, the U.S. and Europe, proclaiming the prospects for the world economy to be “favorable,” Miyazawa said in a later news conference.
However, he added that there was little discussion of the issue. Detailed reports on two of the main subjects — policy implications of the IT revolution and reforms to the international financial system — were released after the meeting.
These two, coupled with the reports on debt relief for the poorest states and abuse of the global financial system, will be submitted to G8 national leaders and be considered at the Okinawa summit.
The biggest item on the Fukuoka agenda, the IT revolution, is also likely to be a key theme of the Okinawa summit.
Acknowledging that the IT revolution can boost world economic growth through increased productivity, the finance chiefs stressed the need for deregulation to promote new business entrants.
They emphasized the importance of minimizing risks involving financial transactions via the Internet, as well as privacy, consumer protection and security of transactions.
They agreed on the need to maintain consistency in regulating online and offline services and strengthen international cooperation in monitoring cross-border transactions. Training of supervisory staff in IT-related knowledge was also called for.
The finance chiefs confirmed the principle that electronic commerce should be taxed in the same way as conventional commerce, referring to an ongoing examination by the Organization for Economic Cooperation and Development, but they stopped short of reaching an agreement on taxing online purchase of digital information, such as music and movies.
The delegates also agreed to improve some of the International Monetary Fund’s lending mechanisms. Contingent Credit Line, for instance, should be made easier for emerging economies to use by reducing interest rates, eliminating the commitment fee and making the lending process more automatic, according to the agreement.
The CCL, designed to prevent financial panic, has not been used since its creation in April 1999.
The G7 ministers also agreed on the need to redistribute the voting power within the IMF to better reflect the economic strength of Asian economies.
On debt relief programs for heavily indebted poor countries (HIPCs), the finance ministers agreed to balance rapid application of the plans for eligible countries and secure the use of funds solely for poverty reduction.
The ministers also pledged stronger support for the ongoing efforts of international organizations, including the OECD, to crack down on money laundering, tax evasion and “harmful” low taxes in tax havens.
Russian Finance Minister Alexey Kudrin took part in a subsequent session to discuss Russia’s economy. Contrary to earlier press reports, Kudrin did not request partial forgives of the debt Russia inherited from the former Soviet Union, Miyazawa said.
The other G7 finance chiefs are Gordon Brown of Britain, Paul Martin of Canada, Laurent Fabius of France, Hans Eichel of Germany, Vincenzo Visco of Italy and Lawrence Summers of the U.S.
The European Commission was represented by Pedro Solbes Mira, an EC member in charge of economic and monetary affairs.