Various terms are included in general forexes such as G7 countries. G20, G8, and G5 may make some people confused about the member countries of each group.
But in this article, we try to talk about the term G7 countries and the following history of the list of G7 currencies. Some sources we make references from Wikipedia documents, and other sources that are not mentioned one by one.
Contents
G7 countries definition
The definition of G7 countries is a term that refers to the acronym Group of Seven, which is a group or organization whose members are intergovernmental governments from seven developed countries. The developed countries in question are France, Germany, Italy, Japan, the United States, Britain, and Canada.
G7 member countries in general are the largest and richest economies that adhere to liberal democracies. This group accounts for 50% of the global net worth in 2020 of $418 trillion.
The G7 plays a big role in the world because it is an ally of the richest countries. They can influence political, economic, social, legal, environmental, military, religious, cultural, and diplomatic relations.
In 2022, Germany has taken over the rotating presidency of the G7.
The G7 was founded with the aim of leading global economic democracy, but in its development, this goal has widened by raising current issues such as climate change, peace, and security, to developing global issues including the Covid pandemic.
G7 countries headquarters
According to Wikipedia notes, the G7 does not have a permanent headquarters. Every time a member holds a summit, it will be held in turn by each member country. Every year the presidency rotates periodically.
History
The history of the formation of the G7 countries cannot be separated from the story of the US Finance Minister George Shultz who held an informal meeting with the West German finance minister Helmut Schmidt, Valéry Giscard d’Estaing from France, and Anthony Barber from the UK in 1973.
The summit continued to the White House at the offer of US President Richard Nixon and became known as the library group because it was held on the ground floor of the library.
Then Japan became a member of Chultz’s proposal in 1973 at the Spring Meetings of the International Monetary Fund and the World Bank. Subsequently, they were known as Group 5.
The G5 faced problems in 1974. In France, President Georges Pompidou died. West Germany, the United States, Britain, and Japan are also problematic. West German Chancellor Willy Brandt, US President Richard Nixon, and Japanese Prime Minister Kakuei Tanaka have all resigned over the scandal. In Great Britain, there was political turmoil where elections were held twice in the same year.
In 1975 the first meeting was held at the initiative of the French president Valery Giscard d’Estaing, with six countries known as the G6.
The G7 meeting started after oil prices soared. A total of six members took part in the first G6 meeting, and a year later Canada joined to become the G7.
Why G7 countries formed
Initially, the G7 was formed to lead industrial democracy and the global economy. However, in its development, it aims to facilitate jointly dealing with global economic problems.
However, the attention is getting wider by including global issues international security issues, and human rights.
When was the G7 formed?
G7 meeting starts from Rambouillet in France in 1975, after the price of oil, soared. A total of six members currently took part in that first G6 meeting, and a year later Canada joined later to become the G7. The initiative for the G7 meeting came from the French President at the time, Valery Giscard d’Estaing, who wanted a higher meeting of the finance ministers of member countries on current economic issues.
During the 1980s, tensions between East and West in the Cold War gave the G7 a more political leaning. The Williamsburg Summit in 1983 adopted a declaration on security in Europe for the first time. The text of support for US President Ronald Reagan’s policies towards Moscow was also adopted, despite objections from French President Francois Mitterrand.
The dissolution of the Soviet Union in 1991 proved to be game-changing. Russia, which attended the summit as a guest in 1992, 1998 was allowed for the first time to attend all summit meetings. The group was officially renamed “G8”.
But the G8 came under criticism from poor countries in 1999 during successive periods of financial crises, for being an exclusive club. Therefore, rich countries are also starting to meet with developing countries in the new G20 grouping, in an attempt to resolve or avoid this crisis.
The 2001 G8 summit in the Italian city of Genoa was overshadowed by violent demonstrations by anti-globalization protesters that left one person dead.
Russia exits G8
In 2014 Vladimir Putin’s Russia was suspended from the G8, due to problems in Ukraine’s Crimean Peninsula.
Sanctions were imposed on Russia. The G8 summit planned for that year in Russia was canceled, and the G8 reverted to being the G7. Ahead of the 2019 summit, Trump called for Russia to be reintroduced arguing it would be far more appropriate to involve them. But his discourse has received little support among Western countries.
G7 vs Russia about Ukraine
After Russia attack Ukraine last February, the G7 leaders held an emergency meeting in Brussels, with the European Union, although non-members were also present. The members of the G7 are Canada, France, Germany, Italy, Japan, the UK, and the United States.
The G7 seeks to impose sanctions on Russia, in a variety of ways including blocking Russia from international trade and global financial institutions.
However, Russia did not remain silent even though it was surrounded by sanctions by developed countries.
Although the ruble had fallen after the sanctions, the move by Russia to stop energy supplies to Europe, and the G7, the ruble strengthened again.
President Putin gave instructions that if they want to get Russian oil must pay in rubles because he doesn’t want to give it free to a country that has imposed sanctions on Russia. As it is known that Russia is the energy supplier of 40% of Europe. To help Ukraine G7 supplies weapons to Ukraine.
Why is China, not a G7 member?
China, although this country has a large economy and the largest population in the world, is not a member of the G7. The reason is that wealth per person is still below the level of wealth per person in the seven G7 member countries.
In the case of Ukraine, China also refused to impose sanctions on Russia even though this country did not support the Russian attack. The reason is this country wants to establish cooperation with any country.
G7 countries CBDC
After seeing China issuing Digital Yuan through the CBDC, the then G7 leaders felt it was important to discuss this issue.
The G7 meeting emphasized issues of strict privacy standards, cybersecurity, the need to protect user data, and transparency about how the information will be secured and used.
The digital currency is energy efficient and operates in an open, transparent, and competitive environment. But on the other hand the importance of cross-border interoperability and no harm to the international monetary and financial system.
List of G7 currencies
The G7, which consists of the seven richest countries in the world, has five currencies that have a high influence on the global economy. The important G7 currencies are the US dollar (USD), the euro (EUR), the Japanese yen (JPY), the British pound sterling (GBP), and the Canadian dollar (CAD).
According to the IMF, the five G7 currencies are the largest reserve currencies with 40% of all world GDP.
These five currencies are very important because they affect international trade and forex exchange. So it is not surprising that the five G7 currencies are very liquid in forex.
Some of the reasons why the G7 currencies are very strong are, a strong economy, sustained growth, the largest banking, and financial system, and is politically stable.
US dollar
The US dollar is still considered the most important currency because it is the world’s largest reserve currency. According to the IMF, 60% of foreign currency reserves are USD and 40% are denominated in USD.
The strength of the USD can not be separated from the history of Bretton Woods which has become the standard currency that is pegged to gold. Even though it eventually collapsed as the US didn’t have enough gold to peg the USD as demand increased.
Japanese Yen
Even though the Japanese yen is a young currency in the elderly country. This currency is also considered a safe-haven currency. With low-interest rates, Japan is an exporter and had the third-largest economy in 2019.
The Japanese yen is also a major currency that is widely traded on forex exchanges with high liquidity.
Euro
The euro currency was introduced in 1999 but was only launched in 2002 by 12 European countries. This currency was created to facilitate trade in the eurozone. After being adopted then this currency is used by 19 countries in the European zone.
According to the IMF, the Euro becomes a foreign currency reserve of 20%. Although this is not included as a safe haven currency. This is more because the eurozone has unstable political conditions. So it is not considered a safe haven.
Pound sterling
The Great British pound is a major currency that is also widely traded in the forex market. It cannot be separated from the history that Great Britain. This country became a prominent leader and the status of capital as a financial liaison.
London is a historical city that became the busiest trading center which caused very high transactions of the Pound currency. This resulted in its high volatility attracting currency traders.
Canadian dollar
This is the fifth G7 currency, which is also widely traded by forex traders. Canada is a large exporter of commodities such as energy and natural resources including wood, oil, and gas.
People assume this is a commodity currency, which is sometimes used to measure the Canadian economy. With declining demand for commodities, it is possible to lower GDP and the currency may weaken.
G7 cryptocurrency
Regarding cryptocurrencies, the G7 is concerned that these cryptocurrencies will be used by Russia to evade sanctions. After the White House and G7 imposed sanctions on Russia.
So that the leaders of the G7 countries will make guidelines regarding strict cryptocurrency regulations. The rule aims to prevent Russia from using cryptocurrencies with associated proxies.
However, Coindesk from an interview with Ari Redbord, head of legal and government affairs at TRM Labs, stated that it is impossible for Russia to move trillions of dollars into highly volatile crypto assets.
G7 summit digital currency
The G7 countries seem to be concerned that China’s launch of the Digital Yuan. It might affect their power on an international level. If the digital yuan becomes the currency used globally. Then the G7 countries will no longer have the power to impose sanctions.
7 central banks in Western countries and Japan have formed a joint research group with the Bank for International Settlements. They outline the basic principles for central bank digital currencies.
The first rule states that the central bank must not compromise monetary or financial stability by issuing digital money. Central banks in developed countries are also formulating specific plans for their own digital currencies. The Bank of Japan, for example, launched a pilot program in April to test transactions using digital currencies.
At the 2021 G7 summit to be held in London, this group has issued a Public Policy Principles for Retail Central Bank Digital Currencies (CBDCs) which also includes digital currencies.
Final thought
The G7 is a group of the richest and most developed countries in the world. They want to play a dominant role at the international level to regulate various financial problems and also global conditions.
During the Ukraine war, this group provided weapons supplies to Ukraine and imposed sanctions on Russia. But not all countries follow the G7 group. Some countries do not support sanctions against Russia including China, India, and Pakistan.
Meanwhile, Hungary also refused to impose sanctions because of its dependence on energy supplies from Russia.
Note: this article is informational only and not investment advice. Forex, and crypto are risky assets. Each investor is responsible for their investment.
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