IQALUIT, Nunavut—Group of Seven financial leaders agreed on the need to continue supporting their economies until financial recovery takes a firmer hold, but they have yet to reach a consensus on how to overhaul regulation of their financial sectors.
U.S. Treasury Secretary Timothy Geithner came to this small Arctic town promoting a U.S. proposal to assess fees against financial firms and a plan to curb trading activities at commercial banks. “The United States is very committed to making sure we put in place a strong, multilateral level playing field across these global institutions and across global lines,” he told reporters after meetings of the G-7 leaders.
Seeing that commitment through could prove a challenge.
French Finance Minister Christine Lagarde said leaders were unable to make collective decisions on a U.S. proposal to limit proprietary trading at commercial banks, partly because financial institutions in countries including France, Germany and Japan aren’t plagued by the same issues as U.S. banks. She added that “it could be quite difficult to define actually what is proprietary trading as opposed to operating in the best interest of banks’ clients, in relation to hedging for example.”
A senior U.S. Treasury official said countries agreed on the basic principles underpinning overhaul efforts, specifically that taxpayers shouldn’t have to shoulder the costs of bailouts.
Mr. Geithner said leaders agreed that any overhaul of financial-sector regulation should be done “in ways that don’t undermine prospects for recovery.”
G-7 leaders said they would continue providing support to their economies until the financial recovery has taken firm hold. “We are committed to maintaining support to the economy,” U.K. Chancellor of the Exchequer Alistair Darling said. “We are confident that we are going in the right direction, although we remain cautious.”
France’s Minister of the Economy, Industry and Employment Christine Lagarde (L), Canada’s Minister of Finance, Jim Flaherty (C) and US Treasury Secretary Timothy Geithner attend the final press conference for the G7 Finance Ministers Meeting in Iqaluit, Canada. Photograph: AFP/Getty
The G-7, which represents the major European and North American economies and Japan, said the global economy has improved but the financial recovery remained tentative.
The G-7 has recently become overshadowed by the larger Group of 20, which also represents large emerging economies such as China, India and Brazil. G-7 financial leaders said they would continue meeting despite that, but would do so in a more informal fashion that won’t regularly include the release of cooperative statements.
Jean-Claude Juncker, chairman of the group of euro-zone finance ministers, said the G-7 agreed to leave unchanged its assessment of world currency markets. He said the G-7′s statement on currencies in its Oct. 3 communique released in Istanbul — a document that addresses China’s currency policy and concerns that the government is keeping the Chinese yuan artificially low so that its exports are more competitive — remained valid.
Protesters weren’t present at the meeting, perhaps because of the challenge of traveling to Iqaluit, located on isolated Baffin Island and reachable only by air in winter. Police presence also was low-key. Security personnel at the Frobisher Hotel, where some of the delegations were staying, stood guard alongside native Inuit who were selling seal brooches and stone carvings to hotel visitors.
Around town, locals put on igloo demonstrations while children played in the snow near G-7 meeting facilities, some of them jumping off 20-foot cliffs into snow drifts. Japanese Finance Minister Naoto Kan delayed his closing news conference Saturday so he and his aides could go dog sledding on frozen Frobisher Bay.
Meena Thiruvengadam, Wall Street Journal, Dow Jones Newswires