Letters

G-7

• Canada
• France
• Germany
• Italy
• Japan
• United Kingdom
• United States

In 1975, in response to the breakdown of the Bretton Woods monetary system, the 1973 Oil Shock, and the economic recession of 1974, the leaders of the world’s largest industrial, free-market economies formed the Group of Seven.

The leaders from each country and their respective finance ministers meet annually at the G-7 summits to consult and coordinate with each other on economic policies.  One of the Group’s most important meetings took place in 1985 at the Plaza Hotel in New York.  The meeting, through coordination among the members, resulted in the dollar weakening significantly against the other members’ currencies, particularly the Japanese yen.  This development helped to reduce the US’s trade deficit.  The list of G-7/G-8 summits and locations is as follows:

Russia or the USSR has been attending meetings of the G-7 since 1991.  Prior to 1998, Russia has only been an “observer.”  Since 1998, Russia has officially been a member of the Group of Seven, changing its name to the “Group of Eight.”

In addition, the European Union sends officials to the Group of Eight meetings.

Several G-7 counter-groups that have been formed to protest the perceived exclusiveness and arrogance of these meetings, such as the G20 Developing Nations.

How It's Used

“In August [1995], the G-7 central banks all bought dollars in a giant coordinated effort, driving the exchange rate nearly to 100 yen.”

"For the last 30-odd years, treasury secretaries have generally focused on G-7 conferences and international crises like emerging market meltdowns. But over the last several months, the scope of the treasury secretary's job has been redefined in historic ways. Geithner will be responsible not just for putting out fires but for rebuilding from the ashes of the world financial system.”

"Group of Seven finance chiefs stopped short of singling out the weaker dollar for criticism and stuck to their mantra that “disorderly” swings in currencies threaten economic growth.

“'Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability,' G-7 ministers and central bankers said in a statement after talks today in Istanbul. Officials welcomed China’s 'continued commitment' to a more flexible currency, which they said would promote balanced global growth. The statement repeated language used at the last G-7 in April."

Also Known As (AKA)

The Group of Seven

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