G7 Finance Ministers Gather in UK to Discuss Urgent Reforms

On May 9-11, the Finance Ministers of the G7 group of nations will be sitting down to discuss relevant banking reforms. There is no communiqué since the meeting which will be held at Buckinghamshire near London will be an informal one. A senior finance official from Canada said that this “free-flowing” meeting which will be also be attended by G7 central bank governors might issue a Chairman’s statement once talks have been concluded.

The G7

The Group of Seven industrialized nations comprises Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. According to a September 2012 Credit Suisse Global Weather Report, the G7 nations own greater than 66% of the wealth of the globe at around US$223 trillion or 144 trillion pounds.

Now that emerging markets such as the BRICS group (Brazil, Russia, India, China, and South Africa) are gaining increasing importance, the G20 is viewed by many as the more important gathering when it comes to the laying down of financial reforms and policies. Some call the G7 meetings as a “photo opportunity.” But Marc Chandler of Brown Brothers Harriman in New York reminds that the G7 must still serve as a forum to address relevant global financial issues.

To nurture the recovery

The meeting will be headed by the Chancellor of the Exchequer George Osborne of the United Kingdom. Chancellor Osborne said that the meeting would primarily deal with the issue of nurturing the recovery. He said that some stability has been regained at this time compared to a year ago as reflected by financial markets.

But the official who disclosed some information on the meeting also revealed that the main agenda would be the “disappointing” economic recovery that characterizes the global economy today. The US economy has seen new momentum and yet the expectations are not yet met in terms of growth. The G7 meeting would probably touch on the necessary measures to be taken on austerity policies and budget given the very sluggish rate of growth.

New designations

For Sir Mervyn King this is to be his last G7 meeting as the chief of the Bank of England for a decade of service. This meeting will give the Osborne the opportunity to meet Mark Carney who will take Sir Mervyn’s post. Carney will step down from the chairmanship of the Central Bank of Canada this coming June.

Is the meeting necessary?

This gathering is said to be a rare occurrence given that G7 Finance Ministers typically gather only at the sidelines of the IMF (International Monetary Fund) and G20 meetings. An official has even declared that the meeting is unnecessary since the ministers could have scheduled their talks to coincide with the upcoming IMF meetings in Washington D.C.

Nevertheless, Chancellor Osborne, during his formal announcement of the G7 meeting said that the group is still a key institution that can contribute to providing solutions for the many challenges to the global economy today. He added that his meeting would serve as an opportunity to show leadership in the fight to deal with the debt crisis that assails the globe.

Photo Credit: G7 Finance Ministers