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G-7 to discuss ‘nurture recovery’ of banks

The role of central banks in shoring up the global economic recovery is set to be a key point of discussion among top financial officials from the world’s seven leading economies when they gather in the UK this weekend. The Japanese yen’s continuing weakness is also expected to come under discussion now that the dollar has breached the 100 yen mark for the first time in a little over four years.

In a statement on Friday ahead of the Group of Seven’s two-day meeting at a country house around 80 kilometres northwest of London, British finance minister George Osborne said the main task officials face over the coming two days is how to ‘nurture’ the recovery.

‘The G-7 is an opportunity to consider what more monetary activism can do to support the recovery, while ensuring medium-term inflation expectations remained anchored,’ said Osborne, who will be hosting the event alongside the Bank of England’s governor Mervyn King.

Osborne suggested that this ‘activism’ may involve ‘targeted interventions’ to support lending in weak parts of the economy. The UK treasury chief noted that the European Central Bank had already started consultations on how best to boost lending to small and medium-sized enterprises, the key engines of economic growth and employment.

US Treasury Secretary Jacob Lew said the G-7 discussions should center on how to boost growth and generate jobs. He said the US economy was healing but not at a fast enough pace.

‘We’re moving in the right direction but while growth is encouraging it’s not sufficient,’ Lew told CNBC. He singled out Europe and said there was a need for policymakers to balance austerity with growth.
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