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G-8 to debate hedge fund, energy conservation next weekend.

TOKYO, May 11 Kyodo

Group of Eight finance ministers will assemble for a two-day meeting next weekend in Germany to discuss ways to ensure the transparency of hedge funds and environmental issues such as energy conservation to cut greenhouse gas emissions.

The gathering, which will be held at a lake resort near Potsdam, is preparatory talks for the G-8 summit next month in Heiligendamm, Germany.

Finance ministers from Britain, Canada, France, Germany, Italy, Japan, Russia and the United States are expected to further debate how to monitor hedge fund activities in an effort to minimize volatile market moves by their transactions.

The G-8 members are divided over the issue, with eurozone members including Germany hoping to enhance control of hedge fund activities by direct monitoring, while the United States and Britain are reluctant about imposing strict regulations. The G-7 is the G-8 minus Russia.

Japan takes sides with the United States and Britain on the issue and prefers indirect controls on hedge funds by monitoring financial institutions that provide them with funds, Japanese officials said.

Asked about Japan's position on hedge funds, Japanese Finance Minister Koji Omi told a news conference Friday, ''We must respect a free market mechanism based on the free economy, while there could be a systemic risk stemming from this (hedge fund activities) in the future.''

''We need to respond to the issue by taking a balance between the two aspects,'' Omi said.

Germany, which hosts the G-8 finance ministers' meeting, is also keen to highlight climate change as one of the top items on the agenda. It said the G-8 finance ministers are likely to tax breaks and emission trading for energy efficiency as part of discussions on ways to prevent global climate change.

Other issues that the G-8 ministers will likely take up include the issue of development such as good governance in African nations and fostering bond markets in emerging economies, Omi said.

The eight finance ministers are also expected to discuss the global economy and reaffirm its solid growth at the meeting, the Japanese officials said.

The issue of exchange rates, which usually draws strong attention of media and market players at any G-7 meeting, is unlikely to become a focal point at the upcoming meeting as central bank governors will not take part in the event.

Some participants of the G-8 talks may mention the recent weakness of the yen against the euro but chances are slim that the issue will become a major debate, given relatively calm remarks by eurozone financial leaders on the matter, compared with the situation early this year, Hiroshi Watanabe, Japan's vice finance minister for international affairs, told reporters Thursday.

The two-day meeting is scheduled to start Friday evening with a working dinner, at which the G-8 finance ministers will meet their counterparts from several African nations -- South Africa, Nigeria, Ghana, Mozambique and Cameroon, the German government said.
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Publication:Japan Policy & Politics
Date:May 14, 2007
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