Group of Seven (G7) finance ministers and central bankers are preparing to discuss potentially destabilising global imbalances at their meeting in Washington next month, it emerged yesterday.

The meeting of the leaders of the seven largest industrialised economies comes two months after finance ministers from the G7 and Russia met in Moscow to discuss energy security. "We haven't decided anything but we are likely to talk about global imbalances," said a G7 source on the sidelines of a meeting of central bankers at the Bank of International Settlements in the Swiss city of Basel.

Central bankers and economists have cautioned that the gaping US current account deficit could lead to a sudden drop in the dollar, while others worry about other imbalances including real estate valuations or the labour market. The US is pressuring China to make more progress toward currency flexibility, to reduce global imbalances which it says threaten the positive global economic outlook.

- (Reuters)