October 4, 2009 / 10:00 AM / 8 years ago

Canada says currency talks should extend beyond G7

ISTANBUL (Reuters) - Canadian Finance Minister Jim Flaherty reminded his European counterparts on Friday that they are not alone in bearing the brunt of a weak U.S. dollar and said any global currency discussions should rightly extend beyond the G7 group to include Asian countries.

Flaherty spoke to reporters in Istanbul ahead of a meeting of the Group of Seven finance ministers and central bankers on Saturday. He said he expected there would be a brief communique after the meeting.

“There’s an important policy role for the G7. If we have substantive discussions, and I imagine we will, then I would expect some sort of brief communique,” he said.

Part of the discussion on global imbalances would inevitably include the impact of the weak U.S. dollar on other economies and the Chinese yuan, which Flaherty has said is not flexible enough.

“I know the Europeans are concerned about the euro and upward pressure on the euro ... that’s not unique to Europe,” he said.

“The Australians are concerned; we’re concerned in Canada about upward pressure on the Canadian dollar because of the weakness of the U.S. currency,” he said.

The Canadian dollar has surged nearly 20 percent against the U.S. dollar since March, prompting Bank of Canada Governor Mark Carney to repeatedly warn that the strong currency could hamper the economic recovery.

In solving global imbalances, the main challenge is to persuade major economies to have flexible currencies, Flaherty said in a repetition of his frequent references to China.

“That type of discussion necessarily involves some of the emerging economies, particularly the Asian economies, and can quite rightly take place in the G20 context,” he said.

The G7 meeting takes place after global leaders designated the G20 as the premier forum for global economic co-operation. This has raised doubts about the G7’s relevance, especially its influence on foreign exchange policies, which many say would carry more punch if endorsed by the wider G20 group of developed and developing economies.

Canada, which will host the G7 next year, and also co-chair a G20 meeting along with South Korea, has suggested the G7 should continue to exist for at least as long as it takes to nurse the global economy back to health.

“There is important work for the G7 to do there too because the financial crisis came out of the G7 countries, not Canada of course, but there’s a role there for the G7 in being part of the solution,” said Flaherty.

He said he expected the G7 and IMF meetings on the weekend to start to put some “meat on the bones” of regulatory reform pledges made by G20 leaders at the Pittsburgh summit last week.

Reporting by Louise Egan; editing by Rob Wilson

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