Japan To Discuss Global Banking Infrastructure Development In G7

Finance ministers from the Group of Seven (G7) advanced economies will meet this week to discuss ways to strengthen the global financial system, Japanese Finance Minister Shunichi Suzuki said on Tuesday, as recent bank failures in the United States highlighted the growing risk of digital bank runs.

"The environment surrounding finance has changed dramatically with the emergence of social media and Internet banking," said Suzuki, who will preside over the G7 finance leaders' meeting in Niigata, Japan, from May 11 to 13.

"Responding to such changes has become a common challenge for countries all over the world, including Japan," he said, adding that the issue will be one of many discussed at this week's G7 meeting.

The recent failure of First Republic Bank has heightened investor concerns about the US banking sector and prompted calls for improved global regulatory oversight of new risks such as digital bank runs.

"Concerns about banks' creditworthiness have yet to subside since the May failure of a regional bank in the United States," Suzuki said.

"We're watching the situation with a strong sense of alarm, because markets and economies are globally intertwined," he said, adding that Japan's banking system was generally stable.

According to two government sources with direct knowledge of the matter, Japan intends to issue a G7 joint communique following the finance leaders' meeting, which may emphasise the need for authorities to remain vigilant to banking-sector woes.

"There won't be much change to the basic message agreed upon in April," one of the sources said, speaking on the condition of anonymity because he was not authorised to speak publicly.

The G7 finance chiefs said in a joint statement issued after their meeting in Washington D.C. in April that they were ready to take "appropriate actions" to maintain the global financial system's stability and resilience.