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 says China's Xi Jinping agreed Iran must reopen the Strait of Hormuz, as Tehran prepares a new shipping mechanism. Tensions over the U.S. blockade and stalled nuclear talks continue to disrupt global oil supplies.
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Iran and Pakistan reviewed bilateral ties and the latest developments in the stalled Iran-U.S. peace negotiations mediated by Islamabad, as Tehran and Washington continue to refuse tangible concessions amid a fragile ceasefire and escalating verbal threats.
North Korean leader Kim Jong Un said plans to strengthen frontline units on the border with South Korea, as well as other major units, were key to "more thoroughly deterring war," state media KCNA reported on Monday.
China will address U.S. concerns about rare earth shortages, the White House said on Sunday in a recap of agreements struck at last week's leaders summit that fell short of calling for the removal of restrictions that have disrupted U.S. aerospace and semiconductor manufacturing.
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