Finance leaders of the Group of Seven (G7) advanced economies gathered in the northeast Japanese city of Sendai for a two-day discussion on issues ranging from the global economy, its risks and an appropriate policy response.
Below are key quotes from briefings by the finance leaders after the conclusion of G7 meetings on Saturday:
UNITED STATES TREASURY SECRETARY JACK LEW
On U.S.-Japan rift on exchange-rate policy:
“It’s important that the G7 has an agreement not only to refrain from competitive devaluations, but to communicate so that we don’t surprise each other and we have a clear understanding on what the potential consequences of actions might be…I’ve been clear in our analysis of current exchange rate movements. It’s a pretty high bar to have disorderly conditions.”
“Japan’s monetary policy was consistent with the agreement to use domestic tools for domestic purposes. It’s very important that it continues to be the case.”
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On G7 agreement on global growth, challenges:
“We need a balanced use of all the policy tools—fiscal policy, monetary policy and structural reforms to address weak demand, boost employment and tackle long-term challenges.”
“The notion that there would be one response in each of our economies using exactly the same fiscal, monetary and structural policies doesn’t reflect each economy’s needs.”
“It’s not a one-size-fits all … When it comes to fiscal and monetary policies, we’re not in the same position. Some countries have more fiscal space than others.”
On whether Japan should raise the sales tax next year:
“Obviously Japan has to make its own judgment on the course to take. But the critical consideration has to be not to put a drag on the economy, and to take action in a way that’s consistent with maintaining growth in the short-term but dealing in the long term with the fiscal challenges.”
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“We (G7) reaffirmed the importance of currency stability given recent market movements. Japan has committed to avoiding competitive devaluation of currencies.”
“I understand to a certain degree that (the yen) may move up or down. However, looking at the past several weeks, the dollar has moved by 5 yen in two days or 8-9 yen in 10 days and we cannot clearly say such a move is orderly. From the U.S. Standpoint, they may say the yen was at 70 yen or so until recently. That was natural for them. They are facing elections, we are facing elections too, and both have (the Trans Pacific Partnership). It is our job to make statements. We must prevent such differences of opinions from becoming emotionally complicated by exchanging opinions.”
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“We have growth, but it needs to be stronger and more sustainable. There is a consensus that monetary policy is well-adapted and there are no big discrepancies in currencies, so there is no need to intervene.”
“We don’t need a big fiscal stimulus package similar to 2008, but countries that can should work on fiscal measures.”
“The G7 did not talk about a ‘Plan B’ to respond to what would happen if Britain left the European Union. We talked about ways to help Britain stay in the EU.”
“A Brexit would have heavy consequences. It would be bad for Britain and bad for Europe, because investors would have doubts and this would affect capital flows.”
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“This G7 meeting shows that the economic situation has stabilised. Monetary policies are focused on the situation in each economy. The euro/dollar rate is stable and in line with fundamentals.”
GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE
On Greece and the IMF:
“I have not solved any differences in my meeting with Madame (Christine) Lagarde, because we have none.”
On a Brexit-referendum:
“We hope that this will not lead to a Brexit.”
“We agreed that (a Brexit) would be the wrong decision.”
On economic growth policies:
“We must be careful, that the progress we have reached since the financial crisis of 2008 must not be wiped out because of…too much liquidity in the markets followed by increasing risk-takings.”
“We all agreed that the state of the world economy is more positive and less nervous than somebody of us thought some weeks ago.”
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On growth strategy:
“We all agreed that there are three elements we need to pursue: structural reforms, monetary policy and fiscal policy.:
“The most important are structural reforms…there are more and more recognizing (in the G7) that structural reforms are crucial.”
“We also have discussed the high volatility of the global capital movements, which are a high risk for the world economy.”
BUNDESBANK GOVERNOR JENS WEIDMANN
“In Germany, growth in the first quarter was pretty strong…but we expect that in the forthcoming months this growth-rate can not be maintained.”
BANK OF JAPAN GOVERNOR HARUHIKO KURODA
“As for monetary policy, we shared our understanding on various agreements made in past international meetings. We confirmed that central banks conduct monetary policy consistent with their mandates to support the economy and prices. Japan, the United States and the euro zone each explained its monetary policy. There were sufficient exchanges of views and we were able to deepen our understanding on each other’s policy.”
