MARSEILLE, FRANCE – Financial chiefs of the Group of Seven industrialized nations agreed Friday to take powerful steps to stabilize financial markets and promote fiscal consolidation, amid growing uncertainty and with no clear end in sight to the European debt crisis.
During a half-day meeting in the port city of Marseille, the G-7 finance ministers and central bank governors also agreed on the need to jointly tackle decelerating growth, as well as to cooperate in the foreign-exchange market when necessary.
“We are taking strong actions to maintain financial stability, restore confidence and support growth,” they said in a statement released after the talks.
Against a backdrop of the eurozone sovereign debt crisis and fiscal deficits, the G-7 financial chiefs said there are “clear signs of a slowdown in global growth.”
The financial leaders from Britain, Canada, France, Germany, Italy, Japan and the United States pledged “a strong and coordinated international response” to these challenges.
Finance Minister Jun Azumi said at a news conference that he raised concerns about the yen’s recent appreciation.
“I think our view on the currency market gained understanding,” he said, although he added that no country responded to his remarks.
“Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability. We will consult closely in regard to actions in exchange markets and will cooperate as appropriate,” the G-7 statement said.
The wording was a copy of a G-7 statement issued after an Aug. 8 teleconference, suggesting the yen’s appreciation did not spark much debate at this meeting.
The G-7 gathering came about a month after Japan conducted its largest-ever single-day currency intervention on Aug. 4 to stem the sharp rise of the yen against the dollar.
The yen remains strong, however, and the dollar hit a fresh postwar low of ¥75.95 in New York on Aug. 19.
The recent decision by the Swiss National Bank to set a minimum exchange rate target to curb the Swiss franc’s surge against major currencies has apparently made the G-7 nations less willing to support further currency market interventions by Tokyo.
During the Marseille meeting, the G-7 financial chiefs vowed to restore fiscal health, while trying to maintain growth.
“We must all set out and implement ambitious and growth-friendly fiscal consolidation plans rooted within credible fiscal frameworks,” the statement said.
“Fiscal policy faces a delicate balancing act. Given the still fragile nature of the recovery, we must tread the difficult path of achieving fiscal adjustment plans while supporting economic activity, taking into account different national circumstances,” it said.
The G-7 financial leaders don’t always issue a statement when they meet as they tend to see the gatherings as a venue for informal discussions.
But they apparently opted to release a statement this time to quell market turbulence. Azumi said the decision to issue the statement reflects “a sense of urgency among the G-7” about current market conditions.
Regarding the European debt crisis, U.S. Treasury Secretary Timothy Geithner said the G-7, along with the International Monetary Fund, is committed to working with European officials “to decisively address” the problem.
Takahide Kiuchi, chief economist at Nomura Securities Co., said he doesn’t see anything new in the latest G-7 release and that a failure to offer concrete steps to stabilize the financial market could trigger further turmoil.
The discussions also covered reform of the financial sector, such as banking regulations.
The G-7 talks were the first major international conference since Prime Minister Yoshihiko Noda took office last week and marked Azumi’s diplomatic debut.