France calls for G7 finmin, central bank on Japan
France said on Wednesday that G7 finance ministers and central bankers will hold a conference call to discuss the economic impact of Japan's crisis and possible steps to calm volatile financial markets.
March 17, 2011 / 08:49 IST
France said on Wednesday that G7 finance ministers and central bankers will hold a conference call to discuss the economic impact of Japan's crisis and possible steps to calm volatile financial markets.
A government source said telephone talks between the Group of Seven rich nations would take place before the weekend. They will address the broad implications of the crisis, including its impact on economic growth, energy output and the supply chain, and its effect on volatile markets.Friday's devastating earthquake and a mounting nuclear crisis have wiped hundreds of billions of dollars off global stock markets and jolted the yen to a four-month high against the dollar, creating expectations of market intervention. "We need to be at the disposal of our Japanese friends on monetary matters," said Finance Minister Christine Lagarde, who chairs meetings of G8 and G20 finance ministers this year."I have asked for a meeting of G7 finance ministers and central bankers so that we can see in what way we can take part in their debt issues and how we can react on a financial level," Lagarde told reporters after a weekly cabinet meeting. President Nicolas Sarkozy said France, a major producer of nuclear energy, would convene a G20 meeting on future options for the energy sector, after the problems at Japan's Fukushima reactor created an international backlash. G7 ministers will use this week's call to ask for an update from Japan's finance minister on the impact of the earthquake and tsunami before moving on to specific issues like the volatility in financial markets, the government source said."I think that it's too early for a G7 intervention," said Nick Kounis, head of economic research at ABN Amro."I'm not sure we're really seeing a very intense risk aversion or the freezing up of international financial markets ... though I think it's right the leaders of major economies are in close contact."Central banker "extremely worried"The damage to the world's third-largest economy from Friday's earthquake and tsunami in terms of destruction and lost output remains extremely hard to gauge but economists estimate it could cost Japan up to USD 200 billion. Japan is a major contributor of technology components and capital goods to the regional supply chain and major disruptions could have a ripple effect across Asia.One G7 central banker, who asked not to be identified, said he was "extremely worried" about the wider effects. "I think the world economy is going to go right down and it has happened at a time when financial markets are still very fragile," he said.ECB Governing Council Member Christian Noyer, governor of the Bank of France, said the bank would weigh the impact of the crisis on its policy decisions, though analysts said this did not dilute expectations of a rate rise in April. Nuclear power accounts for 30% of Japan's energy and prolonged disruption would mean it would need to replace much of this with other sources like fossil fuels, driving up prices.Sarkozy told Wednesday's cabinet meeting he would convene a special meeting of G20 finance and energy ministers in the coming weeks to discuss broad options for the energy sector in the wake of Japan's nuclear crisis, according to a statement."France made the choice of nuclear energy, which is an essential part of its energy independence and fight against greenhouse gases," Sarkozy said. "Lessons will have to be drawn from the accident in Fukushima through an exhaustive review of the security systems of our nuclear plants."German Finance Minister Wolfgang Schaeuble said a meeting of G20 finance ministers and central bankers next week in China, supposed to discuss reform of the global monetary system, would be an opportunity to discuss the situation in Japan."The necessary and the possible will be done," Schaeuble told a news conference in Berlin, adding it was too early to talk about how the international community might aid Japan. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
