France called Wednesday for finance ministers and central bankers of the Group of Seven leading nations to discuss the consequences of the multiple Japanese crises on the world economy and to prevent them from fueling volatility on global capital and commodity markets.
France also plans to hold a meeting of energy and economy ministers of the Group of 20 industrial and developing nations, to foster international cooperation on energy.
French Finance Minister Christine Lagarde said finance ministers and central bankers from the G-7 countries--the U.S., Japan, the U.K., France, Canada, Italy and Germany--would discuss ways to support Japan's response to the crisis, including the potential purchase of Japanese bonds.
"I've asked for a meeting of G-7 finance ministers and central bankers to see how we can buy [Japanese] bond issues and how we can react on a financial level," Lagarde said coming out of the weekly cabinet meeting in the Elysee courtyard.
French officials close to the situation said the G-7 meeting will take the form of a teleconference and will happen before the end of the week.
They added, however that the call is more likely to focus on assessing the impact on the world economy of the Japanese earthquake as well as of the ensuing tidal wave and nuclear incidents, stressing Japan's liquidity and foreign exchange situation is unlikely to warrant direct financial support in the guise of bond-buying.
"The idea is to assess the consequences on financial markets and see whether events in Japan represent a systemic risk," one of them said, citing in particular Japanese banks' exposure to real estate which has been swept away by the earthquake and the tsunami.
Debt-ridden G-7 countries would be hard pressed to buy Japanese bonds, especially as Japan is awash with liquidity and has a large current account surplus.
Since the onset of the crises, the Bank of Japan has injected USD700 billion into money markets to try to limit damage from the earthquake, tsunami and nuclear explosions on the domestic economy. Buying Japanese bonds is also likely to prompt the yen to rise further, which could be even more detrimental to the Japanese economy.
Japanese insurers and reinsurers repatriating yen-denominated assets in order to cover liabilities linked to the disaster is one of the main factors behind the recent rise in the yen, an observer said.
The French government Wednesday raised concerns that massive repatriations of capital to Japan could further increase global financial volatility. French budget minister Francois Baroin also warned that the Japanese crises could create tensions on commodity markets, as prices will track the fall in demand in the aftermath of the crises and a resurgence as Japan rebuilds.
Baroin said that foreign exchange interventions to support Japan had not been discussed at Wednesday's cabinet meeting.
French president Nicolas Sarkozy also said he will call for a meeting of energy and economy ministers of the G-20 in the coming weeks to review options for the global energy mix.
The G-20 meeting could happen before the one planned in Washington on April 14-15, although the schedule could be tight, considering G-20 finance ministers and central bankers are also due to meet in Nanjing, China, soon, the official said.
While the Fukushima accident is increasing global awareness about the risks posed by nuclear power generation, Sarkozy took a firm stance in favor of atomic energy. France, he said, remains committed to fissile nuclear power, on which it depends for about two-thirds of its needs, and isn't planning to stop any of its 58 reactors. Still, a thorough check will be carried out on all of the country's plants.
"France has made the choice of nuclear energy, which is key to its energy independence and in the fight against greenhouse gases...I remain today convinced of the pertinence of this choice," he said in a statement.
"The lessons from the Fukushima accident will be drawn with a complete review of security systems of our nuclear plants. This work will be made public."
The French president's statement comes after Chancellor Angela Merkel froze plans for further nuclear development in Germany, and announced she's planning to shut temporarily seven nuclear plants that went online before 1980.
The low cost of generation has allowed France to become a major electricity exporter. France has also been very active in developing nuclear technology. State-owned Areva is planning to deliver next year a third-generation reactor in Finland.
Sarkozy plans to extend a similar test to all 143 nuclear power plants in the 27 countries of the European Union, and possibly beyond.
"The improvement of safety can't be restricted to national boundaries," he said. "I wish to intensify the effort of harmonizing and improving safety norms at a European and international level."
Source: http://online.wsj.com
France also plans to hold a meeting of energy and economy ministers of the Group of 20 industrial and developing nations, to foster international cooperation on energy.
French Finance Minister Christine Lagarde said finance ministers and central bankers from the G-7 countries--the U.S., Japan, the U.K., France, Canada, Italy and Germany--would discuss ways to support Japan's response to the crisis, including the potential purchase of Japanese bonds.
"I've asked for a meeting of G-7 finance ministers and central bankers to see how we can buy [Japanese] bond issues and how we can react on a financial level," Lagarde said coming out of the weekly cabinet meeting in the Elysee courtyard.
French officials close to the situation said the G-7 meeting will take the form of a teleconference and will happen before the end of the week.
They added, however that the call is more likely to focus on assessing the impact on the world economy of the Japanese earthquake as well as of the ensuing tidal wave and nuclear incidents, stressing Japan's liquidity and foreign exchange situation is unlikely to warrant direct financial support in the guise of bond-buying.
"The idea is to assess the consequences on financial markets and see whether events in Japan represent a systemic risk," one of them said, citing in particular Japanese banks' exposure to real estate which has been swept away by the earthquake and the tsunami.
Debt-ridden G-7 countries would be hard pressed to buy Japanese bonds, especially as Japan is awash with liquidity and has a large current account surplus.
Since the onset of the crises, the Bank of Japan has injected USD700 billion into money markets to try to limit damage from the earthquake, tsunami and nuclear explosions on the domestic economy. Buying Japanese bonds is also likely to prompt the yen to rise further, which could be even more detrimental to the Japanese economy.
Japanese insurers and reinsurers repatriating yen-denominated assets in order to cover liabilities linked to the disaster is one of the main factors behind the recent rise in the yen, an observer said.
The French government Wednesday raised concerns that massive repatriations of capital to Japan could further increase global financial volatility. French budget minister Francois Baroin also warned that the Japanese crises could create tensions on commodity markets, as prices will track the fall in demand in the aftermath of the crises and a resurgence as Japan rebuilds.
Baroin said that foreign exchange interventions to support Japan had not been discussed at Wednesday's cabinet meeting.
French president Nicolas Sarkozy also said he will call for a meeting of energy and economy ministers of the G-20 in the coming weeks to review options for the global energy mix.
The G-20 meeting could happen before the one planned in Washington on April 14-15, although the schedule could be tight, considering G-20 finance ministers and central bankers are also due to meet in Nanjing, China, soon, the official said.
While the Fukushima accident is increasing global awareness about the risks posed by nuclear power generation, Sarkozy took a firm stance in favor of atomic energy. France, he said, remains committed to fissile nuclear power, on which it depends for about two-thirds of its needs, and isn't planning to stop any of its 58 reactors. Still, a thorough check will be carried out on all of the country's plants.
"France has made the choice of nuclear energy, which is key to its energy independence and in the fight against greenhouse gases...I remain today convinced of the pertinence of this choice," he said in a statement.
"The lessons from the Fukushima accident will be drawn with a complete review of security systems of our nuclear plants. This work will be made public."
The French president's statement comes after Chancellor Angela Merkel froze plans for further nuclear development in Germany, and announced she's planning to shut temporarily seven nuclear plants that went online before 1980.
The low cost of generation has allowed France to become a major electricity exporter. France has also been very active in developing nuclear technology. State-owned Areva is planning to deliver next year a third-generation reactor in Finland.
Sarkozy plans to extend a similar test to all 143 nuclear power plants in the 27 countries of the European Union, and possibly beyond.
"The improvement of safety can't be restricted to national boundaries," he said. "I wish to intensify the effort of harmonizing and improving safety norms at a European and international level."
Source: http://online.wsj.com
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