HIGHLIGHTS-G7 finance leaders debate global economy, risks – Reuters

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SENDAI, Japan May 21 Finance leaders of the
Group of Seven (G7) advanced economies gathered in the northeast
Japanese city of Sendai for a two-day discussion on issues
ranging from the global economy, its risks and an appropriate
policy response.

Below are key quotes from briefings by the finance leaders
after the conclusion of G7 meetings on Saturday:

UNITED STATES TREASURY SECRETARY JACK LEW

On U.S.-Japan rift on exchange-rate policy:

“It’s important that the G7 has an agreement not only to
refrain from competitive devaluations, but to communicate so
that we don’t surprise each other and we have a clear
understanding on what the potential consequences of actions
might be…I’ve been clear in our analysis of current exchange
rate movements. It’s a pretty high bar to have disorderly
conditions.”

“Japan’s monetary policy was consistent with the agreement
to use domestic tools for domestic purposes. It’s very important
that it continues to be the case.”

On G7 agreement on global growth, challenges:

“We need a balanced use of all the policy tools – fiscal
policy, monetary policy and structural reforms to address weak
demand, boost employment and tackle long-term challenges.”

“The notion that there would be one response in each of our
economies using exactly the same fiscal, monetary and structural
policies doesn’t reflect each economy’s needs.”

“It’s not a one-size-fits all … When it comes to fiscal
and monetary policies, we’re not in the same position. Some
countries have more fiscal space than others.”

On whether Japan should raise the sales tax next year:

“Obviously Japan has to make its own judgment on the course
to take. But the critical consideration has to be not to put a
drag on the economy, and to take action in a way that’s
consistent with maintaining growth in the short-term but dealing
in the long term with the fiscal challenges.”

JAPANESE FINANCE MINISTER TARO ASO

“We (G7) reaffirmed the importance of currency stability
given recent market movements. Japan has committed to avoiding
competitive devaluation of currencies.”

“I understand to a certain degree that (the yen) may move up
or down. However, looking at the past several weeks, the dollar
has moved by 5 yen in two days or 8-9 yen in 10 days and we
cannot clearly say such a move is orderly. From the U.S.
standpoint, they may say the yen was at 70 yen or so until
recently. That was natural for them. They are facing elections,
we are facing elections too, and both have (the Trans Pacific
Partnership). It is our job to make statements. We must prevent
such differences of opinions from becoming emotionally
complicated by exchanging opinions.”

FRENCH FINANCE MINISTER MICHEL SAPIN

“We have growth, but it needs to be stronger and more
sustainable. There is a consensus that monetary policy is
well-adapted and there are no big discrepancies in currencies,
so there is no need to intervene.”

“We don’t need a big fiscal stimulus package similar to
2008, but countries that can should work on fiscal measures.”

“The G7 did not talk about a ‘Plan B’ to respond to what
would happen if Britain left the European Union. We talked about
ways to help Britain stay in the EU.”

“A Brexit would have heavy consequences. It would be bad for
Britain and bad for Europe, because investors would have doubts
and this would affect capital flows.”

BANK OF FRANCE GOVERNOR FRANCOIS VILLEROY DE GALHAU

“This G7 meeting shows that the economic situation has
stabilised. Monetary policies are focused on the situation in
each economy. The euro/dollar rate is stable and in line with
fundamentals.”

GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE

On Greece and the IMF:

“I have not solved any differences in my meeting with Madame
(Christine) Lagarde, because we have none.”

On a Brexit-referendum:

“We hope that this will not lead to a Brexit.”

“We agreed that (a Brexit) would be the wrong decision.”

On economic growth policies:

“We must be careful, that the progress we have reached since
the financial crisis of 2008 must not be wiped out because
of…too much liquidity in the markets followed by increasing
risk-takings.”

“We all agreed that the state of the world economy is more
positive and less nervous than somebody of us thought some weeks
ago.”

On growth strategy:

“We all agreed that there are three elements we need to
pursue: structural reforms, monetary policy and fiscal policy.:

“The most important are structural reforms…there are more
and more recognizing (in the G7) that structural reforms are
crucial.”

“We also have discussed the high volatility of the global
capital movements, which are a high risk for the world economy.”

BUNDESBANK GOVERNOR JENS WEIDMANN

“In Germany, growth in the first quarter was pretty
strong…but we expect that in the forthcoming months this
growth-rate can not be maintained.”

BANK OF JAPAN GOVERNOR HARUHIKO KURODA

“As for monetary policy, we shared our understanding on
various agreements made in past international meetings. We
confirmed that central banks conduct monetary policy consistent
with their mandates to support the economy and prices. Japan,
the United States and the euro zone each explained its monetary
policy. There were sufficient exchanges of views and we were
able to deepen our understanding on each other’s policy.”

(Reporting by Leika Kihara, Tetsushi Kajimoto, Stanley White
and Gernot Heller; Editing by Sam Holmes)

HIGHLIGHTS-G7 finance leaders debate global economy, risks – Reuters}