Feb 4 (Reuters) - Finance chiefs gather in the remote Arctic city of Iqaluit this weekend for what could be the final meeting of the Group of Seven rich countries' club, separate from the up-and-coming G20 powers that have overtaken it in influence.
The G7 forum came into being in 1976 when Canada joined France, Germany, Italy, Japan, Britain and the United States to form it, so if it passes away as a stand-alone institution on Baffin Island's frozen tundra there will be a peculiar symmetry to the group's history.
Finance ministers, joined at the meeting by central bankers, will discuss the G7's future amid some speculation that host country Canada wants to keep it going because its influence is greater there than in the larger Group of 20.
But the G7's star has dimmed as key emerging-market countries like China, Brazil, India and South Korea have shot to growing economic prominence and claimed their right to shape policy through the broader G20 forum.
There are some key issues, like currency values and financial-market disruptions, where old-line G7 powers may still want councils among themselves because they control key policy levers if the global system becomes unhinged.
But that may occur increasingly on the sidelines, in the reflection of the G20, rather than in separate sessions in splendid isolation like that offered by Iqaluit.
Here are some key facts about the G7, its history and its gradual eclipse by the G20, which includes emerging-market nations and accounts for a growing proportion of global output.
WHY DOES IT EXIST?
Initially there was a Group of Six, formed in 1975, that met first at Rambouillet, France, to mull the issues of the day among themselves at a time when they dominated the global economy.
Canada muscled its way into the group in 1976 to make it the G7, partly on the strength of its oil and natural gas production. Some other members felt Canada was helped into the group by the United States, partly to serve as its ally.
HOW DOES IT WORK AND WHAT DOES IT DO?
It functions as an exclusive club, made up of finance ministers of the day and central bankers who rotate the host responsibilities among themselves. The host sets the agenda, picks the summit sites and handles the organization.
There are several meetings a year, two of them on the fringes of semi-annual meetings of the International Monetary Fund and World Bank each spring and fall, as well as the stand-alone sessions in the host country.
One meeting each year sets an agenda for the G7's political leaders -- the prime ministers and presidents -- who hold their own gathering amid pomp and circumstance to take on political as well as economic issues of global interest.
In the past, the G7 has co-ordinated on currency interventions -- buying and selling in markets to raise or lower the relative value of a particular currency when it is under stress -- and served as a forum for discussing how to co-ordinate market regulation.
It used to issue a closing communique, hotly awaited by financial market participants around the world, that set out the G7's views on issues of the day although the Iqaluit meeting is not expected to do so.
WHO SETS THE RULES FOR MEMBERSHIP
It's a very private club, essentially a word-of-mouth process, but Russia was able to gain a somewhat truncated spot in 1997. Though Russia was not invited to the Iqaluit session, at most such gatherings its finance minister is usually invited in for part, but not all, of the economic discussions.
Russia's president, however, does participate fully in the leaders' sessions, making those official G8 meetings.
An evolving economic landscape in which a growing volume of economic output comes from emerging-market powers has made the G7 look antiquated and spurred its members to talk about expansion.
China, for example, is now the world's No. 3 economy and expanding at a rate that far outstrips any of the G7 powers.
The G7 began a process of "outreach" in recent years, asking China, Brazil, India, Mexico and South Africa to sit in on dinners where subjects of broader interest, including trade, were put up for discussion in order to thresh out the overlapping interests of rich and developing countries.
WHERE IS THIS ALL LEADING?
Put simply, to a broader and more representative group of nations sharing in the task of trying to keep an integrated global economy from running off the rails.
The Group of 20 -- actually 19 countries and the European Union -- now accounts for more than three-quarters of global output and is increasingly seen as the heir to the G7 in a world where the U.S. dollar plays a less dominant role and wealth is far less concentrated than it was previously.
At last fall's G20 meeting in Pittsburgh, a closing communique declared the G20 will henceforth be the "premier forum" for economic cooperation, raising the question of what is to be the G7's purpose.
Iqaluit may define the G7's role and place more narrowly, but in all likelihood it will continue in some form, possibly as an adjunct to the G20.
Some long-time participants see that as a potentially useful development. It would shift some of the spotlight from the G7 so members can get closer to the original idea of unstructured discussions over cognac and cigars, rather than trying to decide how to word a communique that offends no member and still soothes uneasy markets. (Reporting by Glenn Somerville; Editing by Jeffrey Hodgson)