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Credit crunch to top Japan talks Credit crunch tops Japan G7 talks
(about 7 hours later)
Finance ministers from the G7 group of wealthy nations are meeting for a day of talks in Tokyo. Finance ministers from the G7 group of wealthy nations have begun a day of talks in Tokyo.
The fallout from the global credit crunch will top the agenda, pre-meeting briefings suggest. They are discussing the fallout from the global credit crunch, and how best to prevent a similar crisis developing again.
The ministers will also consider how best to prevent a similar crisis developing again. But the meeting is not expected to produce unified policy changes.
Japan hopes the talks will help calm regional stock markets rattled by the rippling effect of the problems in the US mortgage market.Japan hopes the talks will help calm regional stock markets rattled by the rippling effect of the problems in the US mortgage market.
It says mechanisms need to be put in place to force banks and financial institutions to be more transparent in their dealings, says the BBC's Chris Hogg in Tokyo. The US treasury secretary insisted ahead of the talks that his country's economy would continue to grow, though at a slower pace than before.
Japan has called for mechanisms that would force banks and financial institutions to be more transparent in their dealings.
The first thing is that conditions in different countries are not the same Alistair Darling UK Finance MinisterThe first thing is that conditions in different countries are not the same Alistair Darling UK Finance Minister
Britain agrees, and Finance Minister Alistair Darling says the group needs to agree methods to ensure that in future they get more warning when problems emerge.Britain agrees, and Finance Minister Alistair Darling says the group needs to agree methods to ensure that in future they get more warning when problems emerge.
Mr Darling downplayed the prospects of agreement over a stimulus package to try to boost global demand.Mr Darling downplayed the prospects of agreement over a stimulus package to try to boost global demand.
"The first thing is that conditions in different countries are not the same," he said."The first thing is that conditions in different countries are not the same," he said.
While steep interest rate cuts and government spending might be the right move in the US, he said "other countries are not in the same position".While steep interest rate cuts and government spending might be the right move in the US, he said "other countries are not in the same position".
Each had to reach its own conclusions as to what was needed.Each had to reach its own conclusions as to what was needed.
Europe and Japan appear to have little room for manoeuvre, says the BBC's Chris Hogg in Tokyo.
There are strong inflationary pressures to deal with and Japan in particular is saddled with huge amounts of public debt.
Green fundGreen fund
Japan, the US and the UK also plan to propose a new fund, administered by the World Bank, to help poorer countries adopt cleaner technologies to help combat global warming.Japan, the US and the UK also plan to propose a new fund, administered by the World Bank, to help poorer countries adopt cleaner technologies to help combat global warming.
The fund will support publicly and privately financed projects that use technology that helps cut greenhouse gas emissions, increases efficiency and saves energy.The fund will support publicly and privately financed projects that use technology that helps cut greenhouse gas emissions, increases efficiency and saves energy.
Ministers from the three countries say they will pledge 'quite substantial sums' and will invite others to contribute. Ministers from the three countries say they will pledge "quite substantial sums" and will invite others to contribute.
Haruhiko Kuroda, the head of the Asian Development Bank, on Friday warned that the US economic downturn would take its toll on emerging Asian economies.Haruhiko Kuroda, the head of the Asian Development Bank, on Friday warned that the US economic downturn would take its toll on emerging Asian economies.
But he stressed that rising inflation in the region is currently more of a threat than worries about a slowdown.But he stressed that rising inflation in the region is currently more of a threat than worries about a slowdown.
Last week, the International Monetary Fund cut its global economic growth forecast from 4.4% to 4.1%, the lowest in five years.Last week, the International Monetary Fund cut its global economic growth forecast from 4.4% to 4.1%, the lowest in five years.
Following aggressive interest rate cuts in the US and the approval of a bill giving Americans tax rebates worth $167bn (£86bn), the focus will be on whether other industrialised nations will implement stimulus plans of their own.Following aggressive interest rate cuts in the US and the approval of a bill giving Americans tax rebates worth $167bn (£86bn), the focus will be on whether other industrialised nations will implement stimulus plans of their own.
Different conditionsDifferent conditions
The G7 countries include the US, Japan, the UK, Canada, France, Germany and Italy, all of which are experiencing a significant slowdown in growth.The G7 countries include the US, Japan, the UK, Canada, France, Germany and Italy, all of which are experiencing a significant slowdown in growth.
Meanwhile, China, India and other East and South East Asian economies have experienced break-neck growth over the past few years as current account surpluses and foreign exchange reserves have ballooned.Meanwhile, China, India and other East and South East Asian economies have experienced break-neck growth over the past few years as current account surpluses and foreign exchange reserves have ballooned.
G7 members hope the Tokyo meeting will calm global credit fearsG7 members hope the Tokyo meeting will calm global credit fears
But as the global credit crisis and US housing slump has brought the world's largest economy to its knees, concerns have persisted that these problems would spread to Asia, which is heavily reliant on US imports of its products and foreign investment for growth.But as the global credit crisis and US housing slump has brought the world's largest economy to its knees, concerns have persisted that these problems would spread to Asia, which is heavily reliant on US imports of its products and foreign investment for growth.
Meanwhile, perception have changed as to whether the European Central Bank (ECB) is likely to reduce interest rates from their current level of 4% to help boost growth in the eurozone. Meanwhile, perceptions have changed as to whether the European Central Bank (ECB) is likely to reduce interest rates from their current level of 4% to help boost growth in the eurozone.
ECB President Jean-Claude Trichet has previously maintained a tough line on controlling inflation in the 15-nation bloc that uses the euro despite clear signs that a frail recovery was running out of steam.ECB President Jean-Claude Trichet has previously maintained a tough line on controlling inflation in the 15-nation bloc that uses the euro despite clear signs that a frail recovery was running out of steam.
But following an ECB decision to keep rates on hold on Thursday, he appeared to shift focus, stressing the risks to the global economy in his press conference.But following an ECB decision to keep rates on hold on Thursday, he appeared to shift focus, stressing the risks to the global economy in his press conference.
This raised hopes that eurozone interest rates could be cut later this year.This raised hopes that eurozone interest rates could be cut later this year.