Sunday February 11, 2007 - 11:51:30 GMT
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HIGHLIGHTS-G7 finance ministers' meeting in Essen
HIGHLIGHTS-G7 finance ministers' meeting in Essen
Sat Feb 10, 2007 12:06pm ET14
For all stories from the meetings in Essen double click [G7/G8]
ESSEN, Germany, Feb 10 (Reuters) - The following are comments by finance ministers, central bank chiefs and other key officials in relation to the Group of Seven meeting in Essen, Germany.
BANK OF JAPAN GOVERNOR TOSHIHIKO FUKUI
On monetary policy:
"The Japanese economy is in a positive cycle but because economic data was mixed, we decided to keep interest rates on hold last month. We'll keep monitoring the situation. That is what I've explained to other G7 members and there were no particular questions from them."
On the next policy meeting:
"I want people to understand that the BOJ's decision is made by the board. It is counterproductive if I speculate on the outcome of the board. Our policy decisions will be reached only through thorough examinations of economic data."
BANK OF ITALY GOVERNOR MARIO DRAGHI
On euro zone inflation, Italian growth:
"If you look at inflation, today it's under 2 percent, but there are some serious upward risks for prices in the future.
"We still don't have signs of a precise trend (for Italian growth in 2007) ... the important thing is to grow the potential -- that's the best antidote against inflation and against monetary policy which risks becoming restrictive."
ITALIAN ECONOMY MINISTER TOMMASO PADOA-SCHIOPPA:
On Italian growth:
I would like to signal my confidence, not in a play-acting way but quite seriously. Confidence does not mean wishful thinking, it does not mean that one ignores risks. We have emphasised that despite global growth there is no inflationary pressure."
EUROGROUP CHAIRMAN JEAN-CLAUDE JUNCKER
On whether he was happy with G7 statement:
"Colleagues in the Eurogroup are satisfied with what we are expressing in our (G7) communique."
On the Japanese economy, yen:
"As the Japanese minister of finance and governor of the Japanese central bank have said, we believe that the Japanese economy is on a sustainable recovery path and that exchange rates should reflect these economic fundamentals."
ECB CHIEF JEAN-CLAUDE TRICHET:
"I will only say as regards the yen -- perhaps you noted that Jean-Claude Juncker and myself have mentioned what has been said by both the minister of finance and the governor of the central bank of Japan and this comment speaks by itself."
On hedge funds and risks:
"The issue at stake is a big issue. The growth in derivatives is transforming financial markets at a very rapid pace."
He said the low level of volatility and credit spreads perhaps reflected an underpricing of risk by financial markets.
"This underpricing of risk might have to change ... But this is not a new message."
Trichet said talks on improving transparency in the industry were "a work in progress" but self-assessment and a voluntary code of conduct were more likely than regulation as a first step.
"There is no element of warning to the industry."
He also suggested the burden of information-sharing might fall more heavily on the prime brokerage arms of investment banks than on hedge funds themselves.
"Our consensus was that appropriate vigilance of the prime brokers in assessing the risks of highly leveraged institutions, not only hedge funds, was the way to optimise the behaviour of the sector."
BUNDESBANK PRESIDENT AXEL WEBER
"We recognised that the global economy continues to grow robustly.
"Global growth this year is expected at about 5 percent. In the United States it appears that the soft landing scenario is being confirmed, there are signs of a floor under the housing market. The U.S. economy is still on a robust expansion path
"There are increasingly positive data about the Japanese economy. Our Japanese colleagues share this view."
On euro zone:
"In the euro zone the positive picture for this year and next has been confirmed. The cyclical dynamism should have remained in the fourth quarter ... growth in 2007, 2008 should be slightly above potential."
"Despite the (VAT rise) the recovery remains intact. Some of the impulse may have gone, but we will still have growth above the long-term potential and the average rate of past years."
On hedge fund vigilance:
"Precisely due to their tremendous growth, we are of the view that we must monitor them very carefully."
On vigilance (regarding hedge funds):
"This term should signal that we are everything other than relaxed about the systemic risksthat could arise."
JAPANESE FINANCE MINISTER KOJI OMI
On the G7 statement's first paragraph:
"This means G7 countries think that markets, particularly forex markets, should recognise the risk of moving in one direction too heavily."
On Bank of Japan policy:
"I said in January that the government was not in a position to exercise its right to postpone a policy decision by the BOJ, based on my judgments on economic conditions at that time. The BOJ's February policy meeting is some time ahead and it's not appropriate to comment on the future."
On exchange rates:
"Exchange rates should reflect economic fundamentals ... The Japanese colleagues made clear that the economy (in Japan) is on a durable recovery path and that the exchange rate should reflect these basic data."
"Some people said the yen's level is too low in today's discussions." He declined to elaborate. "And I explained that currencies should reflect economic fundamentals and that Japan is aiming to achieve sustainable growth under price stability. Other countries accepted my explanation."
Asked about yen:
"It is important that we agree with our Japanese colleagues that the economic recovery of the fundamental data should also be reflected in the relations with other currencies."
On mood in talks about foreign exchange:
"The atmosphere was very collegial."
On possibility of G7 mentioning yen in communique:
"I don't think the yen will be specifically mentioned in the statement."
"I want to say that exchange rates should reflect economic fundamentals."
Â© Reuters 2007. All Rights Reserve
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