As regards fiscal policy, the discussion in the G7 should not just be about increasing spending, it should also be about improving the quality of the budget. The ECB agrees with the idea that “countries that have fiscal space should use it”, but many countries do not have this fiscal space. Reducing unproductive expenditures and cutting taxes or increasing  BIS central bankers’ speeches  1  investment in productive infrastructure, such as education and research, can lead to growth without increasing the deficit. What about foreign exchange policy? The UK pound and Japanese yen have been increasing and volatility is very high. What will the G7 do to reduce volatility? The G20 countries have committed not to use the exchange rate for competitive purposes, as confirmed in recent meetings in Shanghai and Washington. All of us should act in a way consistent with this commitment and which does not add to global uncertainty. Emerging markets are slowing down and advanced countries have very low growth rates. What should the G7 and advanced countries do for the world economy? In a low-growth environment globally, there might be a temptation for some countries to grow at the expense of other partner countries. So it is precisely the role of the G7 or the G20 to resist such temptation. There is no “magic bullet” for increasing growth. For the G7, it is crucial to send the message to support domestic demand and focus on those structural policies that will be most conducive to growth.
Benoît Cœuré: Interview in The Yomiuri Shimbun Interview with Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, in The Yomiuri Shimbun, conducted by Mr Tadashi Isozumi in Japan and published on 20 May 2016. *  *  *  You are attending the G7 finance ministers’ meeting in Sendai. What do you think the most important topic for discussion will be? The Group of Seven (G7) countries are faced with a common challenge: how can they escape from this low growth, low inflation environment? What is important is that they cooperate and act together. To address future challenges, there needs to be a combination of multiple policies. In order to prevent euro area inflation from being too low for too long, the ECB has brought short-term interest rates to levels close to zero or negative, and is providing forward guidance on the future monetary policy stance. We are also implementing quantitative monetary easing of € billion [about 10 trillion yen] per month at least until March 2017, primarily by purchasing government bonds but also, starting next month, by purchasing bonds issued by non-financial companies. These actions are mutually reinforcing and in particular negative rates are reinforcing the impact of QE. Negative rates are also hurting the financial industry… Negative interest rates impose direct costs on some industries: the banking industry, the pension funds industry and the insurance industry. But so far the overall impact on bank revenue has been positive, thanks to higher loan volumes and lower risk provisions.