Japan backs US push for action rather than regulation at G20

Japan yesterday threw its weight behind US efforts to ensure next month's G20 summit focuses on the need for immediate co-ordinated action to support the world economy rather than long-term efforts to improve financial sector regulation.

In an interview with the Financial Times that highlighted the growing rift in the G20 ahead of today's pre-summit meeting of finance ministers, Kaoru Yosano, Japan's finance minister, said he understood the European-led push to focus on tightening financial regulation. But he suggested such issues appeared cosmetic compared to more pressing economic problems.

“We all agree [on the need for better financial regulation], but I personally feel: are these actions necessary at a time of crisis? What we ask at this moment, is to save the life of the world economy. Not to comment about its beard,” said Mr Yosano, who is also Japan's minister for economic and fiscal policy.

His comments come amid a lively fierce transatlantic debate about what the G20's priorities should be at its April 2 summit and the degree to which individual countries should commit to aggressive stimulus action.

Tim Geithner, US Treasury secretary, on Wednesday called for the world's biggest industrialised countries to commit to spending 2 per cent of their gross domestic product this year and next to stimulate the global economy.

European leaders, however, argue that they have already done their part and that the debate should move forward.

At a meeting with Angela Merkel, the German chancellor, President Nicolas Sarkozy of France said Europe had “already invested a lot for the recovery”.

Christian Noyer, governor of the Banque de France, told the FT yesterday that the US needed to fix its own financial system rather than pressing other countries to come up with fresh plans.