STRONG MEMBERSHIP TO COORDINATE POLICY STEPS THAT WOULD HELP REDUCE TRADE AND INVESTMENT IMBALANCES. THAT HAS BEEN LARGELY THE DOMAIN OF THE OLD-LINE G7 POWERS -- THE UNITED STATES, BRITAIN, CANADA, FRANCE, GERMANY, ITALY AND JAPAN -- BUT THE UNITED STATES HAS BEEN PRESSING FOR A LARGER IMF ROLE, A MANTLE RATO APPEARS WILLING TO ASSUME. "THE DAYS WHEN G7 FINANCE MINISTERS COULD SIT IN A HOTEL ROOM AND MAKE DECISIONS ABOUT EXCHANGE RATES ARE GONE," HE SAID, REFERRING TO 1985'S PLAZA ACCORD TO WEAKEN THE DOLLAR. THE G7 HAVE LOTS TO CONSIDER ON FRIDAY, INCLUDING WHAT IS EXPECTED TO BE ANOTHER YEAR OF BRISK GLOBAL GROWTH. JAPANESE FINANCE MINISTER SADAKAZU TANIGAKI, SPEAKING TO REPORTERS IN WASHINGTON ON FRIDAY, SAID THE FINANCE LEADERS NEEDED MORE DISCUSSION ON THE ECONOMIC IMPACT OF OIL PRICES, WHICH HAVE RENEWED THEIR RISE. TANIGAKI ALSO SAID THE G7 WOULD DISCUSS CAPITAL FLOWS IN THE WAKE OF CHANGING INTEREST RATE CONDITIONS AROUND THE WORLD, ESPECIALLY THE IMPACT ON EMERGING ECONOMIES. THE COMMUNIQUE THEY ISSUE AT AROUND 6:30 P.M. EDT (2230 GMT), WILL BE CLOSELY SCRUTINIZED FOR AN ASSESSMENT OF THAT RISK BUT ALSO FOR SIGNS THEY AGREE ON INCREASED SURVEILLANCE AUTHORITY FOR THE IMF ON CURRENCY AND OTHER MATTERS. TENSION OVER THE CURRENCY ISSUE HAS BEEN HEIGHTENED BY THE INABILITY OF THE UNITED STATES OR OTHER G7 NATIONS TO PERSUADE CHINA TO REVALUE ITS YUAN FASTER -- A FAILURE UNDERLINED BY INCONCLUSIVE TALKS ON THURSDAY BETWEEN CHINESE PRESIDENT HU JINTAO AND PRESIDENT GEORGE W. BUSH. EUROPEAN SOURCES INDICATED ON FRIDAY THAT SOME G7 MEMBERS, LIKE GERMANY, WERE RELUCTANT TO HAVE THE IMF PLAY A MAJOR ROLE IN FOREIGN EXCHANGE GUIDANCE, ACCORDING TO REUTERS. THAT IS IN CONTRAST TO WHAT U.S. TREASURY OFFICIALS HAVE URGED AND MIGHT REFLECT SOME UNDERLYING WARINESS WITHIN THE G7 THAT THE IMF IS MERELY SEEKING A NEW JUSTIFICATION FOR ITSELF AS DEMAND FOR ITS CRISIS LOANS FALLS IN A HEALTHY GLOBAL ECONOMY AND WIDENING AVAILABILITY OF PRIVATE CAPITAL FLOWS.
