Brussels, 09/09/2011 (Agence Europe) - Finance ministers and central bankers from the G7 economies will be meeting in Marseilles on 9-10 September to discuss how to bolster flagging economic growth around the world. The French economy minister, Francois Baroin, said in an interview with French newspaper Le Figaro that around the world, everyone was worried about slow economic growth and action was needed that suited each country's situation.
In Europe, the balance is weighted towards austerity measures. Struggling with the sovereign debt crisis, many eurozone countries have introduced one or more austerity packages to deal with public finance in the medium-term and the European Commission points out that these plans, whether or not introduced as a condition for financial aid, include structural reforms to stimulate growth. The few countries like Finland that have budgetary room for manoeuvre should act as economic stabilisers to stave off the worst of the economic slowdown expected by the ECB to become apparent in the second half of the year (see EUROPE 10448). In the United States, the focus is on stimulatory measures and on Thursday evening, President Barack Obama announced a massive economic recovery plan of more than $400 billion, including an infrastructure-building programme and tax reductions for small business, with the aim of creating a million jobs. In an interview in the Financial Times, the US Treasury Secretary, Tim Geithner, called for urgent action to stimulate growth.
When it comes to monetary policy, the recent decision by the Swiss National Bank to set an upper limit on the Swiss franc's exchange rate against the euro is bound to be a subject of much debate. This unusual decision took commentators by surprise and is likely to revive fears of a “currency war” in which countries use monetary policy to keep their economies competitive.
The world's bankers will be discussing financial regulation and Baroin mentioned the need for banks to increase their capital in line with the Basel III rules, dealing with the danger of economic meltdown, how dealers are paid (bonus and/or salary), high frequency trading and regulating parallel finance systems. On Saturday, the participants will examine implementation of the Deauville Partnership, an aid programme for North African and Middle Eastern countries that took part in the revolutions in the Arab world - a plan set up at the G8 summit in Deauville (France) in May this year. The next G20 finance summit will be held in Paris in October. (M.B./transl.fl)