G7 reflections: one of the Plaza Accord's behind-the-scenes players offers his insights.

• Author: Oba, Tomomitsu

The International Economy magazine, now in its twentieth year of publication, has evolved in step with the G7, it seems.

The establishment of the G7 was agreed upon at the Tokyo Summit in 1986, one year after the Plaza Accord had been signed by the G5. The Tokyo declaration states:

"... the Heads of State or Government: Request the seven Finance Ministers [including those of Italy and Canada] to review their individual economic objectives and forecasts collectively at least once a year, using the indicators specified below, with a particular view to examining their mutual compatibility;

As for the G5, in view of the formation of the G7, [the Heads of State or Government] ... Reaffirm the undertaking ... to cooperate with the International Monetary Fund in strengthening multilateral surveillance, particularly among the countries whose currencies constitute the SDR [special drawing rights], and request that, in conducting such surveillance ... their individual economic forecasts should be reviewed, taking into account indicators such as GNP growth rates, inflation rates, interest rates, unemployment rates, fiscal deficit ratios, current account and trade balances, monetary growth rates, reserves, and exchange rates."

In spite of the fact that the Tokyo declaration chose the expression, "countries whose currencies constitute the SDR" and did not use the "G5" designation, the G5 meeting was held first for the Louvre Accord in February 1987, and the G7 was treated as a forum for ex post facto authorization. So it seemed at least to the finance minister of Italy, who excused himself midway through the conference and returned home. The upshot was that it proved awkward to hold the G5 meeting thereafter.

By 2007, with the passage of twenty years, the G7 has changed its character significantly. First, the process of economic integration in the European Union has advanced and the euro has been introduced. And second, Russia and China have been invited to G7 meetings for the exchange of views. At the G7's Essen meeting in February 2007, the invitees included Brazil, India, South Africa, and Mexico, in addition to Russia and China.

As for the first change, I have been musing about the euro's strength these days. The market cites many reasons for the euro's strength, such as the economic growth rate of 2.7 percent in the euro zone, a rate approaching the 3.4 percent growth of the United States, and the narrowing of the interest rate gap between the...