Finance chiefs of the Group of Seven nations vowed Saturday to take appropriate action to ensure financial stability after a series of U.S. bank failures raised concern about spillover effects, asserting that the financial system remains resilient for now.
In a joint statement after a three-day meeting in Niigata, the G-7 underlined the need to address "data, supervisory and regulatory gaps" in the baking system after they weighed risks from the widespread use of messaging apps and online banking, blamed for causing digital bank runs.
The G-7 also said it will aim to launch efforts to build robust supply chains with developing nations by the end of the year, apparently with nonmember China in mind.
"We will continue to work closely with supervisory and regulatory authorities to monitor financial sector developments and stand ready to take appropriate actions to maintain financial stability and the resilience of the global financial system," the joint statement said.
The gathering, under the presidency of Japan, came amid bank and debt woes that have cast a cloud over the global economy. European lender Credit Suisse suffered a sharp fall in its stock price due to the banking turmoil, leading to its acquisition by rival UBS.
The possibility of a default by the United States added to the concern amid a political deadlock over raising its debt ceiling.
The finance ministers' meeting was among the last in the run-up to the G-7 summit to be chaired by Japanese Prime Minister Fumio Kishida next week.
"Our G-7 unity is stronger in addressing global issues," Finance Minister Shunichi Suzuki told a joint press conference with Bank of Japan Governor Kazuo Ueda. The group remains vigilant against risks to financial stability, the minister added.
The G-7 comprises Britain, Canada, France, Germany, Italy, Japan and the United States, plus the European Union.
China, which is not a G-7 member, figured into the talks as the finance chiefs debated how to address debt vulnerabilities among developing nations and build better supply chains critical to achieving green growth. Beijing is known for lending practices that often imperil developing debtor nations.
The new envisaged partnership for RISE, or resilient and inclusive supply-chain enhancement, is designed to help low- and mid-income nations play bigger roles in the supply chains of products necessary for decarbonization and nurture their domestic industries.
The initiative's funding and members will be worked out with the World Bank and other parties.
Russia's war on Ukraine and support for Kyiv and its neighbors were also high on the agenda.
In their statement, the G-7 finance chiefs called "for an immediate end of Russia's illegal war against Ukraine, which would clear one of the biggest uncertainties over the global economic outlook."
The G-7 took the view that the global economy remains "resilient" despite multiple shocks from the COVID-19 pandemic, Russia's war and surging inflation. Still, it pledged to undertake an "agile and flexible" macroeconomic policy if needed.
Soaring inflation has prodded major central banks, including the U.S. Federal Reserve and the European Central Bank, to raise interest rates, though the BOJ remains the most dovish.
BOJ chief Ueda, who took the helm in April, told the G-7 gathering that the Japanese central bank will persist with monetary easing because inflation, currently above its target, will start to slow later this year.
"The full impact on the economy and inflation of rate hikes (overseas) has not necessarily emerged. Many shared the view that they would want to guide policy while giving due consideration to this point," Ueda said.
Gist of joint statement from G-7 finance chiefs
The G-7 finance chiefs:
-- stand ready to take appropriate action to ensure financial stability.
-- say financial system remains resilient.
-- will aim to launch mutually beneficial partnership initiative for supply chains by year-end.
-- vow unwavering support for Ukraine, express strong commitment to assisting neighboring countries.
-- will prevent sanctions evasion by Russia.
-- pledge agile and flexible macroeconomic policy amid heightened uncertainty.