Agenda for G-7 meeting in Japan this weekend will be a packed one

Tokyo

WITH the threat of currency wars rumbling like distant thunder, exchange rate volatility will probably loom large at the Japan-hosted G-7 finance minister and central bank governor meeting in Sendai this weekend. But it is what this volatility could portend that worries some policymakers.

Currency fluctuations have been caused largely by tectonic shifts in monetary policy among the world's leading economies - those of the US, Japan, the eurozone and of course China. These have triggered a tsunami of capital flows that threatens to wax larger as monetary policy normalises.

Whether or not it grows to crisis proportions matching those of the 1997 Asian financial crisis or even of the global financial crisis of 2008 depends largely…