ABSTRACT
This chapter examines the establishment and historical evolution of the Group of Seven (G7) process, as a series of regularised interactions between finance ministries and central banks, in the context of the re-emergence of wide-scale international capital mobility and global financial activities, as well as an ideational shift away from Keynesian economic thought. It begins by looking at how dramatic changes in the international monetary and financial system, which heralded the re-emergence of a liberal financial order, provided the context for the inception of the G5/G7 process. The restrictive post-war financial system and fixed exchange rate regime only existed for as long as US interests and the US payments position permitted. The re-emergence of global finance has brought with it increased systemic risk and it is the dangers of this systemic risk and how to respond to it that have increasingly framed G7 discussions over the last decade or so.
