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Expectations for the Banff Meeting of G7 Finance Ministers and Central Bank Governors
John Kirton, G7 Research Group
May 20, 2025 (updated from version published on May 16, 2025)
From May 20 to 22, 2025 G7 finance ministers and central bank governors will gather at Banff, Alberta. It is a significant event in several ways.
It is their first scheduled, public, in-person, stand-alone meeting during Canada’s year at G7 host. It follows one on February 27 in Cape Town, South Africa, held on the margins of the G20 ministerial meeting and chaired by then Canadian finance minister Dominic Leblanc and central bank governor Tiff Macklem; it issued no communiqué. Another, virtual meeting, on March 17, chaired by Canada’s new finance minister, François-Philippe Champagne, who will chair again at Banff, discussed global trade, competitiveness, economic growth and other key global issues.
The Banff meeting is now the only ministerial one left before the leaders’ Kananaskis Summit on June 15–17. It takes place only three and a half weeks before it. It will thus do much to prepare, preview and provide a platform for what G7 leaders will do there. Canada’s Finance Department has been coordinating closely with the Prime Minister’s Office on the Banff agenda.
The Banff meeting takes place soon after US president Donald Trump said he would attend the G7’s Kananaskis Summit, but not the G20’s Johannesburg one in November. Thus, his Treasury Secretary, Scott Bessent, who had skipped the G20’s finance ministers meeting in Cape Town, is very likely to attend Banff, alongside Jerome Powell, governor of the US Federal Reserve. And because pre-summit ministerial meetings raise G7 governments’ implementation of the commitments their leaders make at their summit itself, the Banff meeting should help ensure that the decisions made at Kananaskis will be delivered in the year ahead.
The Banff meeting will have an immediate, direct impact on every citizen of a G7 member who buys goods, services, inputs and ingredients from another country, as participants try to contain the trade war launched by President Trump. It will similarly affect everyone who pays interest on their credit cards and credit lines, car loans, student loans and mortgages on their homes.
The three-day Banff meeting should have full attendance from the finance ministers and central bank governors of all G7 members, including the European Union, and their invited guests: the heads of the International Monetary Fund, the Organisation for Economic Co-operation and Development, the World Bank and the Financial Stability Board for the entire meeting, as well as Ukraine’s finance minister, Sergii Marchenko, and the president of the Financial Action Task Force for the sessions of most relevance to them.
They will address a full-strength agenda, covering prosperity, security and partnerships. It includes the global economy, economic resilience and security, Ukraine, financial crime, cybersecurity and artificial intelligence (see Appendix A). The commitments they make should be similar in number but different in their breadth and balance to the 51 commitments made at the last full-fledged G7 finance meeting in Washington DC on October 25, 2024 (see Appendix B).
On prosperity, their focus will be on trade and investment. Participants will try to contain and de-escalate the trade war launched by Trump against his fellow G7 members. First in line as a target was Canada, the G7 host and highly dependent for its prosperity on exports to and imported products, services, inputs and ingredients from the US. Japan and the EU members have been hit too. The United Kingdom, which just got a little relief from Trump, will wants more.
Macroeconomic policy comes next. Trump’s tariffs flow from his belief that America’s bilateral trade deficits on the visible goods trade with his partners show that the US is subsidizing them and can be balanced by imposing high tariffs on them. Its fiscal policy component includes coming to a common understanding of the state of the global economy, the impact of members’ existing and projected big fiscal deficits on their desired non-inflationary growth, their ability to finance their promised tax cuts, new spending on defence and infrastructure and interest payments on their soaring government debts, the costs of a tariff war–induced slowdown or recession or other shocks, and the market reaction to all of the above.
These issues have gained added force since Friday, May 16, when Moody’s downgraded the US government’s credit rating from its top-tier AAA, for the first time since 1917. Interest on the US Treasury’s 30-day bond jumped above 5%. This will raise the cost of financing the US’s historically high accumulated debt of $36 trillion and annual deficit of $1.8 trillion. Its Congressional Budget Office forecast that the new prospective budget deal, approved by the key committee on May 18, could raise the former another $3.5 trillion to $5.2 trillion over the next ten years.
The monetary policy component of the Banff agenda involves the cumulative impacts of central banks’ policy interest rate changes among G7 members, after Trump’s demands that Powell lower the US ones to match the other G7 ones.
The exchange rate components could involve discussions about the impact of a declining or stronger US dollar and exchange rate intervention. It could even include discussion of a potential “Mar-a-Lago Accord” like the Plaza Accord of 1985, and the status of the US dollar as the world’s reserve currency, especially as other central banks, including China, turn to accumulate gold instead of US dollars in their central bank reserves.
Financial regulation issues include prospective changes in bank regulation, especially about relaxing the requirement for the biggest, tier one banks’ supplementary leverage ratio of the capital they must hold, as the US is pressing to do. The largest eight US banks must now keep capital of five percent of their leverage, while their European, Japanese and Canadian counterparts need only 3.5 to 4.25 percent.
There is now a major concern with economic security, supply chain security, energy security and critical minerals security, against the recognized and real threats from Russia, China and a protectionist, isolationist Trump. These threats are joined by those from climate change, natural disasters, biodiversity loss, prospective health pandemics and unregulated, runaway artificial intelligence that could instantly flow to China and other adversaries.
Banff’s security agenda starts with support for Ukraine. It also did at the last major G7 finance ministers meeting on October 25, 2025. There they made seven commitments on Ukraine of the total of 51 produced there (see Appendix B).
Now the focus is on imposing capital controls and tariffs on Russia. It is also on using the EU’s €200 billion in foreign Russian assets, if the EU cannot secure the required unanimity to extend the existing sanctions beyond their scheduled expiry at the end of July. Other measures include banning new Russian gas and spot market contracts this year with a full phase-out by 2027, and imposing tariffs on Russian enriched uranium.
The Middle East will come next. The focus is now on delivering food and medicines to the starving civilians in Gaza, which Israel has just said it is finally prepared to do. Members might also build on the three Middle East commitments made last October – to deliver humanitarian assistance in the Middle East, support the UNIFIL peacekeeping force, and “plan for early recovery in Gaza, when the situation allows.”
Partnerships start with those among the G7, or the “G6” without the US, to counter these interconnected threats.
They extend to those with outside countries, in the democratic Global South and beyond. Here the focus is on having the multilateral development banks mobilize private capital to assist struggling developing countries. Ministers might also discuss the Partnership for Global Infrastructure Investment created at the G7 summit in Elmau, Germany, in June 2022.
Also likely is a major modification or elimination of the four commitments made last October. They were to help replenish the International Development Association “to eradicate poverty on a liveable planet”; to strongly support an expanded donor base; to help replenish the African Development Fund in 2025; and to support the Alliance for Green Infrastructure in Africa for the energy transition, infrastructure gap and climate resilience.
The three-day meeting at Banff provides plenty of time for many bilateral discussions among G7 members. Media and market attention will be on encounters between the US and its partners on tariffs and trade, and who will get Bessent’s next deal after the ones he helped initiate with the UK and China. Japanese finance minister Kato Katsunobu plans to meet Bessent to discuss exemptions from higher US tariffs and Trump’s accusation that Japan was lowering the yen to support Japanese exports and thus increase the US trade deficit with Japan.
Other discussions could seek to foster freer trade and economic partnerships between all the non-US members, which all want diversification and insurance against Trump’s protectionist moves. They will be inspired by the deal just reached on May 17 between the EU and the UK. For Canada the test will be finally getting full free trade with the European Union and United Kingdom, where only Canada’s supply-managed poultry and dairy products is still in its protectionist prison.
Source: Department of Finance Canada, Media advisory, May 14, 2025
9:00 a.m. – 9:15 a.m.
The Minister and Governor will officially open the G7 Finance Ministers and Central Bank Governors’ Meeting.
9:30 a.m. – 4:30 p.m.
The Minister and Governor will co-chair sessions on the global economy, economic resilience and security, and the situation in Ukraine, among others.
Thursday, May 22
8:30 a.m. – 12:30 p.m.
The Minister and Governor will co-chair sessions on financial crime and artificial intelligence, among others.
Subject |
Number |
Percentage |
Macroeconomic Policy |
3 |
6% |
Support for Ukraine |
7 |
14% |
Middle East |
3 |
6% |
Artificial intelligence |
2 |
4% |
Financial sector issues |
8 |
16% |
Multilateral development banks |
6 |
12% |
International Monetary Fund |
2 |
4% |
Debt issues |
3 |
6% |
Health and finance issues |
5 |
10% |
Green transition |
5 |
10% |
International tax cooperation |
7 |
14% |
Total |
51 |
100% |
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g7@utoronto.ca This page was last updated May 22, 2025. |
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