What’s a Finance Minister?

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As much as we might spend time defining the role of the different functions in a company (what is the title? whose responsibility is what? what are the measurable objectives?…), an article in Le Figaro on 21 May presented the conundrum of the definition of the role of the “Finance” Ministers of the G8. Whereas competitive companies may not liberally share this information, governments are obliged to understand each other’s structures & responsibilities. The article, entitled “Les droles d’avatars du ministère des Finances,” explains that in the US, the Treasury Secretary [Paulson] is responsible for the management of the economy, including taxes, financial regulation and the USD. However, he is not responsible for the Federal budget, international commerce, industry… In Japan, meanwhile, the Finance Minister [Omi] is responsible for public finances and the Yen. The role of overseeing the economic strategy falls to the man in charge of the Minister of the Economy, Commerce and Industry [Amari], who is widely seen as the man who rebooted the Japanese economy over the last five years. In the UK, the title is “Chancellor of the Exchequer,” again another angle. One can imagine the complication of deciding who to send to which international meeting – an affair of State. In any event, the separation in France of the roles under Jean-Louis Borloo, the new Minister of Finance, Economy & Employment–whereby one side handles the creation of wealth and the other handles the wealth distribution and obligatory withholdings–seems quite sensible. In any event, it sort of follows a capitalist (“liberal”)-to-socialist split.

I was curious to see what Breton (outgoing) said to Borloo. During the transfer of power, the former Minister for Finance warned his successor that, with the change in responsibilities, he was going to have to comment on the figures of the French economy, “an exercise which is not always simple, which requires a little tact, much of modesty and humility”.

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  1. Brad

    A good point that the roles are defined quite differently in each country’s domestic context.

    I am not sure I agree with how they were characterized in this article, however. Responsibility for the balance between economic growth and inflation control falls in the responsibility of the central bank in several of the countries mentioned. While interdependent with fiscal policy over the longer term, in the near term it is interest rate policy and anticipated growth that drives currency movements – so I don’t think you can say that those finance ministers are responsible for their currencies.

    Lastly, I think the agenda of these G8 meetings tends to focus on a relatively narrow band of issues (e.g., developing world debt, risks to global financial stability, regulation of global capital markets entities). So countries would be wise to send the delegate who has the element of the portfolio which is on the agenda – whether or not they can be termed a “finance minister” or not. Make sense to you?

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