labels: Bank general
G-8 weighs measures to stem market turmoil, reverse US slowdown news
11 April 2008

Mumbai: Finance ministers and heads of central banks of  the 'Group of Seven' developed countries and Russia will discuss short-term prospects of the global economy amidst the growing economic pain arising from the US credit market crisis.

G-8 is expected to endorse a series of recommendations from the Basel-based Financial Stability Forum aimed at improving transparency in financial markets in the wake of the crisis. Among the proposals are increased capital requirements, faster disclosure of losses by banks and increased cross-border monitoring by regulators.

While they may not all agree on how much coordinated action will be required to alleviate the crisis, finance ministers and central bankers have said they will discuss stronger regulation of financial markets to reduce the chance of a future crisis.

The prospects look rather alarming as the crisis in the US housing, financial and credit markets spread to other countries. The pace of world economic growth has already slowed down even as the US is on the brink of a recession or, perhaps, is already into it.

Despite the current crisis and warnings by multilateral agencies like the International Monetary Fund (IMF), Washington believes the US economy is strong enough and expects positive changes by the end of the current year, and an even more rapid economic growth in 2009.

G-8 will also discuss the reform of IMF at its ministerial meeting. The IMF board of directors recently approved a reforms package despite objections from countries, including Russia.

The G-7 officials is meeting a day after European Central Bank president Jean-Claude Trichet warned that the financial-market turmoil may have a ``broader'' impact on the European economy. US treasury secretary Henry Paulson also acknowledged the `down-turn' in the US economy while the Bank of England is nearer to a rate cut citing a fall in global economic growth and lack of credit access.

The IMF also estimated a 25 per cent chance of a global recession as the credit squeeze sparked by losses on US mortgage securities get worse. Banks have cut lending heavily after $245 billion of asset write-downs and credit losses since the start of 2007.

Officials from the US, Japan, Germany, the UK, France, Italy and Canada are scheduled to release a statement later in the day.


 search domain-b
  go
 
G-8 weighs measures to stem market turmoil, reverse US slowdown