G7 finance ministers voiced growing concern over rising public debt and volatile bond markets as they met in Paris on Monday following a global sell-off driven by fears that the Iran conflict could fuel inflation.
Ministers are expected to discuss the economic fallout from the conflict and turbulence in global bond markets, a particular concern for Japan, while also seeking common ground on addressing economic tensions and global imbalances.
Bonds from Tokyo to New York extended losses on Monday, with investors betting on central bank rate rises amid concerns that higher energy prices could reignite inflation.
Asked whether bond markets were collapsing, French Finance Minister Roland Lescure said: “They’re undergoing a correction - I wouldn’t say they’re collapsing.”
“We are no longer in a period where public debt is not a subject,” he told reporters as he arrived at the meeting.
The meeting, which is also being attended by representatives from G7 central banks, will examine how countries can co-ordinate responses to shocks such as inflation through temporary, targeted and reversible measures, the French finance ministry said.
German central bank chief Joachim Nagel said policymakers could do a great deal to calm markets and restore positive momentum.
Japanese Finance Minister Satsuki Katayama said she had been instructed by Prime Minister Sanae Takaichi to “minimise various risks” when asked about rising long-term interest rates, without elaborating further.
The G7 finance ministers will also seek common ground on tackling global economic tensions and co-ordinating critical raw material supplies.
However, divisions within the G7 are complicating efforts to project unity ahead of a leaders’ summit in the spa town of Évian from 15 to 17 June.
“Don’t put in place measures that would make the situation worse,” International Monetary Fund chief Kristalina Georgieva said as she arrived for the meeting.
At the centre of the Paris agenda are what Lescure described before the meeting as deep-seated global economic imbalances fuelling trade friction and risking a turbulent unwinding in financial markets.
Focus turns to Trump-Xi summit
Lescure, who is hosting the talks, said the G7 offered an opportunity for frank dialogue among allies at a time of widening disagreements with Washington.
“These discussions are not easy. I’m not going to tell you that we agree on everything, including, of course, first and foremost with our American friends,” he told journalists.
The two-day meeting follows a summit between U.S. President Donald Trump and Chinese President Xi Jinping in Beijing that yielded few concrete economic breakthroughs, as tensions over Taiwan and trade simmered beneath a display of diplomatic cordiality.
Finance ministers will be looking for an update on U.S.-China relations following the Trump-Xi summit and the latest U.S. efforts to reopen the Strait of Hormuz.
U.S. Treasury Secretary Scott Bessent said the trip to China had been highly successful, adding that he would urge the G7 to enforce sanctions targeting Iran’s “war machine.”
Critical mineral high on agenda
Another priority will be critical minerals and rare earths, with G7 governments attempting to co-ordinate efforts to reduce dependence on China.
G7 countries are also seeking progress on a shared toolbox of measures to stabilise markets and encourage domestic investment, potentially including price floors for producers, pooled purchasing and tariffs.
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Ukraine called for more support during the G7 summit in Canada. President Volodymyr Zelenskyy made a direct appeal at the two-day gathering, while Canada’s Prime Minister Mark Carney announced fresh sanctions on Russia and a major new aid package for Kyiv.
Australia is set to begin negotiations on a new security and defence partnership with the European Union, while also pushing for a long-anticipated trade agreement, Prime Minister Anthony Albanese announced at the G7 summit.
The Kremlin backed U.S. President Donald Trump's claim that Russia’s expulsion from the G8 in 2014 was a mistake but dismissed the relevance of the current G7, calling it “rather useless.”
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U.S. President Donald Trump said on Monday he had paused a planned attack on Iran after appeals from the leaders of Qatar, Saudi Arabia and the United Arab Emirates, allowing negotiations to continue over a possible deal to end the conflict.
A 5.2 magnitude earthquake struck China’s Guangxi region early on Monday, killing two people and forcing more than 7,000 residents in Liuzhou to evacuate as rescue efforts continued.
Azerbaijan and Georgia have agreed to resume daily passenger train services on the Baku-Tbilisi-Baku route from 26 May, 2026, marking a major step in restoring regional rail connectivity after services were suspended in 2020 due to the COVID-19 pandemic.
Iranian Foreign Minister Abbas Araghchi said Tehran remained committed to reaching a diplomatic settlement with the U.S. while continuing to strengthen its defensive capabilities amid ongoing regional tensions.
Finance ministers from the Group of Seven (G7) have urged the International Monetary Fund (IMF) and the World Bank to increase support for countries hardest hit by the conflict in the Middle East.
U.S. President Donald Trump said on Monday that he had paused a planned attack on Iran after Tehran sent a peace proposal to Washington. He said there was now a “very good chance” of reaching a deal to limit Iran’s nuclear programme.
Turkish Foreign Minister Hakan Fidan and German counterpart Johann Wadephul said Monday that Ankara and Berlin are both keen to deepen strategic cooperation.
U.S. President Donald Trump said on Monday he had paused a planned attack against Iran after Tehran sent a peace proposal to Washington, and that there was now a "very good chance" of reaching a deal limiting Iran's nuclear programme.
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