G20 vows to boost liquidity, flexibility

The Group of 20 (G20) influential nations today agreed to move more rapidly towards a flexible, market-determined exchange rate systems, and a new `Precautionary and Liquidity' line to provide short-term liquidity to weak economies.

The leaders agreed to go beyond the Greek crisis while agreeing on measures that will convince markets that the risk of further euro zone contagion can be stemmed.

The draft action plan that is part of their Cannes summit communiqué, draft also welcomed China's determination to increase currency flexibility in line with market fundamentals.

''We also support the IMF in putting forward a single facility to fulfill the emergency assistance needs of its members,'' the communiqué said.

While no figure was agreed to, sources said the fund could be in the range of $300-350 billion, sourced mostly from large emerging countries such as China.

Greece has dumped its referendum plans to opt for a 130 billion euro ($178 billion) EU bail-out package even as Italy, under pressure from financial markets and other EU members, agreed to monitoring its progress on reforms of pensions, labour markets and privatisation by the IMF and the EU.