G-7 commits to step up controls on terrorist financing
Japanese Finance Minister Taro Aso, center back, presides over a meeting of finance ministers and heads of central banks of the Group of Seven in in Sendai, northern Japan, Friday, May 20, 2016. Top finance officials of the G7 industrialized economies kicked off their two-day meeting over discussions on revitalizing the global economy on Friday. (Yohei Kanezashi/Kyodo News via AP) JAPAN OUT, MANDATORY CREDIT
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AKIU, Japan: The Group of Seven major economies agreed Saturday to more aggressive action to fight financing of terrorism and violent extremism that are a threat to global stability.

Finance leaders of the G7 issued an “action plan” following talks in northern Japan calling for increased exchanges of information on financial intelligence, reducing the level of cross-border transactions subject to disclosure and collaborate on targeted sanctions for terrorists’ financial networks.

The announcement followed two days of talks ahead of a G7 summit in central Japan’s Ise region next week.

The officials spent Friday discussing ways to use monetary policy, government spending and longer-term reforms to help support growth.

“All of us were really able to have a candid discussion and to reaffirm the important role of the G7,” said Japanese Finance Minister Taro Aso.

Having agreed to only tacit coordination of their varying strategies for boosting growth, the G7 finance meeting turned Saturday to issues such as terrorist financing, tax evasion and support for fighting pandemics.

Aso acknowledged differences with the U.S. over such issues as exchange rates, but insisted there was no overt friction.

“They have their own position. They have an election coming and we also have an election coming,” he told reporters. “We have to say what we think to each other because it’s business. It’s normal to exchange views and ensure things will not go awry because issues become too emotional.”

U.S. Treasury Secretary Jacob Lew said Friday he hoped the talks would keep on track commitments made during recent discussions in China by the wider Group of 20 major economies, where members pledged to not manipulate exchange rates to their own advantage.

A recent rise in the value of the Japanese yen against the U.S. dollar is adding to pressures on Japanese companies who had reaped record profits as the yen weakened in recent years, fattening earnings brought back to Japan in yen terms.

Japan and other G7 countries reaffirmed their commitment not to engage in “competitive devaluation of currencies.” But Aso has hinted at the possibility of intervention if the yen’s fluctuations are seen to be too “disorderly.”

The Japanese finance minister also played down suggestions of major differences over the leeway for more government spending by countries struggling to keep deficits under control, saying each country must adapt policies to suit their own troubles and finances.

Most of the governments of the G-7 favor more pro-active government spending to help support flagging growth, while Germany has remained more conservative on fiscal matters, regarding structural reforms as crucial.

Officials said the only consensus reached was that while there is no one-size-fits-all approach, all economies are facing a stifling lack of demand, as factories churn out more cars, clothing and computers than consumers are willing to buy.

The talks also touched on nonfinancial risks to growth, such as the refugee crisis, terrorism and a looming referendum in Britain over whether or not to leave the European Union. Such a move is viewed as likely to cause major disruptions both in Europe and in global financial markets.

The World Bank, whose president Jim Yong Kim, is attending the talks, launched Saturday a financing mechanism that creates an insurance market for risk from pandemics. It said Japan would provide $50 million to fund the $500 million initiative.

The issues of tax evasion and financial transparency were also on the agenda, following the release of the so-called “Panama papers,” which disclosed details of offshore companies set up for companies and wealthy individuals by the Panama-based law firm Mossack Fonseca. Companies registered in tax havens are often used for legitimate business purposes, but also can facilitate tax evasion and money laundering.

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