G7 pledges swift action to tide over global financial crisis news
12 April 2008

Mumbai: Finance ministers and central bankers from the Group of Seven rich nations have vowed to act swiftly on measures aimed at moving beyond a credit crisis that threatens global economic growth.

The world economy "continues to face a difficult period'' and "near-term economic prospects have weakened,'' the G7 countries said and pledged cooperation to strengthen the financial system.

"The turmoil in global financial markets remains challenging and more protracted than we had anticipated,'' G7 said in a statement issued in Washington.

Coming as it did in the backdrop of fresh signs of economic distress in the United States, the G7 meeting also expressed concern about sharp fluctuations in currency markets, especially the sharp fall in the US dollar since G7 last met in Tokyo in February.

With US consumer confidence at its lowest since 1982, and a hammered housing market, the G7 said risks to the economic outlook were tilted to the downside.

"There may be more bumps in the road. As we work through this period, our highest priority is limiting its impact on the real economy,"
US treasury secretary Henry Paulson said after the meeting.

The G7, did not specifically say the US economy was heading for a recession. It also did not recommend the use of government funds to bail out troubled markets.

Central banks have flooded markets with cash and cut interest rates to try to revive lending and keep economies afloat even as banks have written down $225 billion in assets tied to souring mortgages and other loans in 2007 and the first quarter of 2008.

The meeting focused more on a special study commissioned by the G7 that offered a detailed assessment of the banking and regulatory failures that contributed to the ongoing bout of market turmoil.

The meeting endorsed the report from the Financial Stability Forum, which calls for tougher capital requirements for banks to ensure they can withstand periods of financial market stress, and urges closer international cooperation between central banks and regulators.

The G7 groups the United States, Canada, Britain, France, Germany, Italy and Japan.


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G7 pledges swift action to tide over global financial crisis