G7 to meet on Japan crisis economic threat

March 17, 2011 at 4:00 AM
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PARIS, March 17 (UPI) -- The world's leading economies will hold an emergency meeting on the threats to the economy of Japan's mounting crisis, the French finance minister said.

The meeting of U.S. Treasury Secretary Timothy Geithner, U.S. Federal Reserve Chairman Ben Bernanke and the finance ministers and central bankers of the other Group of Seven industrial nations will seek to support Japan's crisis response -- including a possible purchase of Japanese bonds to keep money flowing, French Finance Minister Christine Lagarde told reporters after the weekly French Cabinet meeting in Paris.

"I've asked for a meeting of G7 finance ministers and central bankers to see how we can buy (Japanese) bond issues and how we can react on a financial level," said Lagarde, who chairs G7, G8 and G20 finance ministers meetings this year and was ranked by Forbes magazine as the world's 30th most powerful woman.

"We must be at the disposal of our Japanese friends," she said, describing Friday's devastating earthquake, tsunami and a subsequent nuclear crisis as "extremely worrying on the human, environmental and economic levels."

The conference-call meeting -- to be held late Thursday or sometime Friday, depending on Japanese officials' availability -- will also likely focus on calming financial markets and opening major central banks' lines of credit to ensure private banks have easy access to the Japanese yen, The New York Times said.

The yen hit a record high against the U.S. dollar Wednesday as Japanese insurers and other financial firms sold billions of dollars in stocks and commodities to generate cash to help finance rebuilding efforts.

Economists estimate the crisis' costs could top $200 billion.

While the massive cash influx could help reconstruction, a prolonged surge in the yen could hold back Japanese exports, hurting Japan's recovery from the crisis, officials said.

A prolonged disruption of Japan's nuclear-power industry could raise oil prices as Japan races to replace nuclear fuel -- which accounts for 30 percent of its energy -- with fossil fuels, they said.

French President Nicolas Sarkozy said Wednesday he would call for a meeting of G20 energy and economy ministers in the coming weeks to assess the threats this could pose to global energy supplies.

G7 and G20 ministers will also likely discuss the Japanese crisis at three other meetings in the next 30 days, German Finance Minister Wolfgang Schaeuble told reporters Wednesday. This includes a G20 meeting in Washington April 14-15.

The G7 -- made up of the United States, Japan, Britain, France, Canada, Italy and Germany -- focuses on financial issues. The G8 -- which is the G7 countries plus Russia -- is generally a forum for foreign affairs, energy and security cooperation. The G20 of rich and leading developing countries includes finance ministers and central bank governors from 19 countries plus the European Union.

Those countries are Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey and the United States.

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