The G-7 acknowledged its fall in the pecking order last year when it ceded responsibility as the preeminent forum for dealing with the world’s economic and financial problems to the G-20. The recent economic crisis has underscored a belief for many that the exclusive G-7, comprising the United States, Canada, Britain, France, Germany, Italy and Japan, is an outdated grouping.

While those countries used to run the world, they’re now the ones facing soaring government debt, high unemployment and — for Britain and the U.S. — the fallout from multibillion dollar banking system bailouts.

Even as they met in Canada’s remote Nunavut territory, other developed western European countries sparked renewed turmoil in financial markets via fears about rising debt levels in Greece and Portugal.

In contrast, emerging nations like China, India and Russia, have survived the global recession in far better shape — China recorded growth of 10.7 percent last quarter thanks to a stimulus package that spurred car sales and a property boom.

Iqaluit was the first meeting since the G-7 agreed to meet less and issue fewer statements.

Flaherty seized the opportunity of Canada inheriting the rotating presidency of the G-7 this year from Italy to focus discussions among nations with common issues, declining to invite Russia, which rounds out the G-8, or China and India, as Britain did when it held the chair.

He stressed the G-7′s role as a “first responder” in a crisis, pointing to the fact that the grouping remains the world’s largest donors of development aid.

At fireside talks about the G-7′s future on Friday, Flaherty’s office distributed a document that stressed the G-7′s relevance despite the rise of the G-20, pointing out that it serves as a catalyst for ideas to be debated by the larger grouping.

“I think the G-7 has a significant future. We’re a small group. we know each other quite well,” Flaherty told reporters after the meeting. “Most of the large financial institutions are residents some where in the G-7 and I think there’s a sense of shared responsibility, they are to make sure financial sector reform is done effectively efficiently and in a way that will stand the test of time.”