G7 Finance, Central Bank Chiefs Discuss Russia Sanctions

The Yomiuri Shimbun

17:21 JST, May 12, 2023

NIIGATA — Finance ministers and central bank chiefs from the Group of Seven nations have been discussing sanctions against Russia and support for Ukraine in Niigata, which is hosting a G7 finance summit through Saturday.

Finance Minister Shunichi Suzuki and Bank of Japan Gov. Kazuo Ueda are attending the 3-day confab, which kicked off Thursday with a meeting focused on measures to increase the effectiveness of sanctions against Russia.

Ukrainian Finance Minister Sergii Marchenko, who participated remotely, called for continued support. Meanwhile, Suzuki said Japan would contribute $1 billion (about ¥130 billion) to support countries neighboring Ukraine through the Japan Bank for International Cooperation.

The funds will be used to support the acceptance of displaced Ukrainians and promote investment by Japanese companies.

G7 finance leaders also discussed the impact U.S. bank failures could have on the global economy. Before Thursday’s meeting, Ueda said, “The financial system is currently stable,” but that he would like to maintain close communication with other G7 members.

A joint statement is expected to be released Saturday when the meeting closes.

In the wake of a series of bank failures in the United States, G7 finance ministers and central bank governors were to discuss Friday ways to strengthen the financial system, eying the situation in which social media and internet banking have made rapid outflows of deposits possible.

Silicon Valley Bank and two other lenders have collapsed in the United States since March. Information about the bank failures spread on social media, prompting some customers to immediately withdraw deposits via smartphone apps and other means, highlighting the threat of digital bank runs.

“The environment surrounding the financial sector is changing dramatically with the development of social media and internet banking,” Suzuki said Thursday. “This is a common challenge faced by all countries, including Japan.”

During the three-day meeting, G7 members will likely be sharing lessons learned from the U.S. bank failures and exploring ways financial regulation and supervision can be adapted for the digital era.

On Friday afternoon, ministers from six countries, including Brazil, India — host of the Group of 20 Leaders’ Summit later this year — and African Union chair Comoros, were invited to an expanded meeting at which the agenda was to feature the debt problems faced by low- and middle-income countries, and the establishment of a framework to rebuild supply chains for products essential for renewable energy in a bid to reduce dependence on China.