G-7 to discuss balanced approach for global growth

Financial chiefs from the Group of Seven advanced economies will gather Friday for a two-day meeting in Britain to discuss a balanced approach for sustainable global growth.

During the meeting in Aylesbury in the suburbs of London, the G-7 finance ministers and central bank governors are also expected to pay attention to Japan's bold monetary easing steps as the U.S. dollar topped 100 yen on Thursday in New York for the first time in about four years.

But the financial chiefs are likely 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.

While some emerging economies remain critical of accommodative monetary policies by major advanced economies such as Japan and the United States out of concerns over possible negative spillover effects, including massive fund inflows and formation of asset bubbles, the G-7 is not a venue where the Bank of Japan's ultraeasy policy will spark heated debate, the source said.

Regarding 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."

Japanese Finance Minister Taro Aso and BOJ Governor Haruhiko Kuroda may brief their fellow G-7 participants about Japan's strategy of 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 prospect is critical," the Treasury official said.

The official also noted increasing demand in countries with current account surpluses will provide debt-ridden European countries relief 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 of implementing new capital rules broadly agreed in 2010 under the so-called Basel III accord as many G-7 members have yet to complete their domestic procedures.