Group of 20 finance chiefs may issue a warning of the geopolitical risks stemming from the Ukraine crisis in a communique to be released after their two-day meeting in Washington from Thursday, sources close to the matter said, underscoring concerns it could stifle the global economy down the road.
Ahead of the G-20 gathering, the Group of Seven countries -- Britain, Canada, France, Germany, Italy, Japan and the United States -- also held an emergency meeting in the U.S. capital and exchanged views on "the situation in Ukraine, its financing needs and the international response," the G-7 said in a statement.
Earlier Thursday, U.S. Treasury Secretary Jack Lew told Russian Finance Minister Anton Siluanov during bilateral talks that Washington is "prepared to impose additional significant sanctions" on Moscow if Russia escalates its involvement in Ukraine, the U.S. Treasury Department said.
Given the tough U.S. stance, G-7 finance ministers and central bank governors are believed to have touched on whether and how to ramp up pressure on Russia.
The G-20 met for the first time since Moscow annexed the Crimean peninsula last month, intensifying a Cold War-style confrontation between Russia and Western nations that have supported the new anti-Moscow government of Ukraine.
If the situation remains deadlocked and Western countries continue to impose sanctions against Moscow over violating its neighbor's sovereignty, foreign investment inflows to Russia would fall and its currency, the ruble, would plunge, hurting the Russian economy.
There are fears a slump in Russia's economy would weigh on the European economy, which has close trade relations with Russia, and could in turn cast a shadow over the global economy.
The geopolitical threat from the Ukraine crisis is "one of the risks" for the world economy, though it is not yet significantly choking global economic growth, Bank of Japan Governor Haruhiko Kuroda told reporters prior to the G-20 meeting.
Brushing aside speculation that Western nations are trying to isolate Russia further, Kuroda said the G-20 finance chiefs are expected to engage in "constructive debate" over economic issues.
As for financial assistance to Ukraine as it teeters on the brink of fiscal collapse, the focus is on whether Russia will agree at the G-20 gathering to a proposal by the United States, European countries and Japan to support the cash-strapped nation.
Other topics likely to be addressed during the meeting include the effects on the world economy of the U.S. Federal Reserve's tapering of its large-scale asset purchases, and China's so-called "shadow banking system" under which a massive amount of loans have been provided by nonbank entities in the nation.
The G-20 finance chiefs agreed at their last meeting in February in Sydney on an "ambitious" goal of boosting their collective gross domestic product by "more than 2 percent" over the next five years.
In Washington, they are expected to confirm that they will make efforts to craft "comprehensive growth strategies" at the G-20 summit to be held in Brisbane, Australia in November, in the face of emerging risks to the global economy.
From Japan, whose economy is on the verge of emerging from nearly two decades of deflation on the back of Prime Minister Shinzo Abe's economic policies, Finance Minister Taro Aso and Kuroda attended the G-20 gathering.
Aso and Kuroda are set to pledge that Japan will take necessary steps to ease the negative impact of the recent consumption tax hike, including a 5.5 trillion yen stimulus package currently being implemented.
While explaining the hike in the tax rate by 3 percentage points to 8 percent on April 1 to cover swelling social security costs for the graying population, Aso may also promise to restore Japan's fiscal health, the worst among major developed countries.
The G-20 groups Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the European Union.