Japan’s aggressive monetary easing policy may spark debate at a two-day meeting of the Group of Seven financial chiefs from Friday as the dollar surged to ¥101 in Tokyo for the first time in more than four years.

During the gathering in Aylesbury in the suburbs of London, the G-7 finance ministers and central bank governors are expected to reaffirm their February commitment that fiscal and monetary policies should be aimed at supporting domestic demand, not targeting exchange rates, a conference source said.

Some emerging economies are critical of the accommodative monetary policies by major advanced economies, particularly Japan and the United States, due to concerns of possible negative spillover effects, including massive fund inflows and the formation of asset bubbles.

The source said the G-7 will not be a venue where the Bank of Japan’s ultra-easy policy will spark heated debate. But the yen’s current rapid depreciation against the dollar could rekindle concerns that the BOJ’s bold monetary policy is actually aimed at driving the unit lower to boost Japan’s exports and economic growth.

On Japan’s economic and monetary policy, a senior U.S. Treasury official told reporters Wednesday in Washington that the United States is “closely monitoring” Japan’s efforts to boost domestic demand and looks forward to “further definition of the government’s plans to push ahead its ambitious structural reforms.”

Finance Minister Taro Aso and BOJ Gov. Haruhiko Kuroda may brief their fellow G-7 participants on Japan’s strategy for defeating deflation through its unconventional monetary policy.

On the global economy, the financial chiefs from Britain, Canada, France, Germany, Italy, Japan and the United States are likely to share the view that the U.S. economy is on a moderate recovery track, while the eurozone economy remains in bad shape.

“Strengthening European prospects is critical,” the Treasury official said.

The official also noted that increasing demand in countries with current account surpluses will provide relief to debt-ridden European countries and spur the global economy, indirectly urging Germany to step up efforts to boost domestic demand.

With regard to financial regulations, the finance chiefs are expected to reaffirm the need to implement new capital rules broadly agreed upon in 2010 under the so-called Basel III accord, as many G-7 members have yet to complete their domestic procedures.

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