US Treasury Secretary Jack Lew addresses a news conference at the G7 finance ministers and central bankers meeting in Dresden, Germany, yesterday. Lew repeated warnings not to minimise the global stability risk of Greece sliding out of the eurozone, even if most of its debt is no longer held by commercial banks.

Reuters/Dresden, Germany

The US warned yesterday of a possible accident for the world economy if Greece and its creditors miss their June deadlines to avert a debt default.
Germany said there was no sign of a breakthrough.
With Athens struggling to make repayments due next month, the debt stand-off between Greece and its European Union partners overshadowed a meeting of policymakers from the Group of Seven rich nations otherwise held to focus on ways to get the global economy growing strongly again.
US Treasury Secretary Jack Lew repeated warnings not to minimise the global stability risk of Greece sliding out of the eurozone, even if most of its debt is no longer held by commercial banks.
“There is great uncertainty in there at a time when the world needs greater stability and certainty,” Lew told reporters after the G7 meetings.
Greece, which has been stuck in a deep debt crisis for the past five years, is due to pay back €300mn ($329.61mn) to the International Monetary Fund next Friday, although the IMF has said that deadline could be pushed back until later in June.
On June 30, Greece’s bailout expires, meaning it would be unable to call on cash currently available to it.
Lew said time was precious. “If you look from January until now, too much time has been spent unproductively,” he said.
He called for agreement quickly on the broad terms of a deal to avoid the risk of stumbling on difficult details at the last moment: “I think waiting until the day or two before whatever the deadline is, is just a way of courting an accident.”
Greek officials earlier this week said they were close to an outline agreement. That claim was quickly quashed by top officials from eurozone countries and the IMF.
German Finance Minister Wolfgang Schaueble said yesterday there was no indication of a breakthrough. “The positive news from Athens is not fully reflected in the talks,” he said.
France struck a more optimistic note, however, saying officials were not considering the possibility of Greece leaving the eurozone.
“There is no Grexit scenario,” Finance Minister Michel Sapin told reporters.
Trying to show that Greece had not dominated their meetings, G7 officials said they had discussed ways to finally put behind them the financial crisis of 2007-09.
Canada and Germany renewed their calls for countries to focus on bringing down their budget deficits as the best way to get their economies growing again.
But in a reminder of the long-standing divisions among policymakers over the merits of austerity or public spending, the US said major economies should consider using fiscal policies to support growth and avoid deflation.
The G7 said China was progressing towards having its renmimbi currency included in a basket of currencies used by the IMF. That would be a recognition of Beijing’s clout in the global economy. But Germany said China was unlikely be given the green light this year.
The finance ministers and central bank chiefs of the world’s wealthiest nations are pushing for a “code of conduct” for banking professionals, the head of the German central bank, Jens Weidmann, said yesterday.
The Bundesbank chief said the Group of Seven nations were “encouraging” the Financial Stability Board to “start work on such a code.”
The FSB is an international body that monitors and makes recommendations about the global financial system.
It is based in the Swiss city of Basel and headed by Bank of England governor Mark Carney.
The banking sector has come under fire worldwide in the wake of a wave of different scandals such as the rigging of interest rates and foreign currency markets.
Speaking at a news conference following a meeting of G7 finance ministers and central bank governors, Weidmann said the code would have it limits and would remain a voluntary one.
“It’s clear that regulation and supervision have their limits. But at the end of the day it’s about personal integrity,” Weidmann said.



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