According to a final draft of its communiqué, finance leaders of the Group of Seven (G7) leading nations set a year-end goal for establishing a new programme to diversify global supply chains and committed to fix regulatory holes in the banking system.

The G7 central banks stated in the drafting communiqué that they remained “strongly committed” to attaining price stability and keeping inflation expectations well-anchored.

“The global economy has shown resilience against multiple shocks including the COVID-19 pandemic, Russia’s war of aggression against Ukraine, and associated inflationary pressures,” the draft communique said.

“Nevertheless, we need to remain vigilant and stay agile and flexible in our macroeconomic policy amid heightened uncertainty about the global economic outlook,” it said.

The G7 affluent countries’ finance ministers and central bank governors will issue the communique after their three-day summit in the Japanese city of Niigata closes later on Saturday.

The drafted statement contained no reference of the US debt ceiling standoff, which overshadowed the G7 meeting as policymakers worried about the possibility of a US default.

China has also been on the minds of the G7 financial chiefs, with Japan, this year’s chair, leading efforts to diversify supply chains and lessen their reliance on the world’s second-largest economy.

The G7 economies would grant funding to low- and middle-income nations under the new partnership programme so that they could play a larger role in supply chains for energy-related products, such as by refining minerals and processing industrial parts.

“Diversification of supply chains can contribute to energy security and help us maintain macroeconomic stability,” according to the draught communiqué.

The G7 would collaborate with interested countries and relevant international organisations to establish the scheme “by the end of this year at the latest,” it stated.

“Spillovers from Russia’s war against Ukraine and disruptions caused by the pandemic have made clear the importance of diversified and resilient supply chains,” U.S. Treasury Secretary Janet Yellen said in a bilateral meeting with her Japanese counterpart Shunichi Suzuki on Saturday.

The drafted statement made no mention of a US-proposed plan to examine imposing targeted limits on Chinese investments to counter Beijing’s use of “economic coercion” against other countries.

However, it stated that the G7 will endeavour to guarantee that foreign investment in key infrastructure “does not undermine the economic sovereignty of host countries.”

The conversations among finance executives will lay the basis for the G7 summit in Hiroshima next week.

The G7 finance ministers convened at a time when concerns about the United States’ debt ceiling stalemate are adding to the global picture, which is already darkened by signs of weakening in China’s economy, stubbornly high inflation, and the recent failure of many U.S. banks.

Concerning the banking system’s troubles, the official communiqué stated that the financial system was resilient as a result of regulatory measures made following the 2008 global financial crisis.

“We will address data, supervisory, and regulatory gaps in the banking system,” the draft communique said.

According to the drafted statement, the G7 restated their criticism of Russia’s “illegal, unjustifiable, and unprovoked war of aggression” against Ukraine and stated that they will continue to increase coordination in monitoring cross-border transactions between Russia and other countries.

(Adapted from FastBull.com)

Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy, Sustainability