G-7 promises actions to stabilise global economy

September 23rd, 2008 - 12:14 pm ICT by IANS  

Washington, Sep 23 (DPA) Finance ministers and central bankers from the Group of Seven (G-7) leading industrialized democracies have pledged to take whatever action was necessary to ensure the stability of the global economy.”We are ready to take whatever actions may be necessary, individually and collectively, to ensure the stability of the international financial system,” the group said in a statement issued Monday after a conference call.

Washington is reportedly seeking participation from other countries in a $700-billion rescue fund.

US Treasury Secretary Henry Paulson said some countries had signalled their readiness to help out but there had been no firm commitments. The US is “talking very aggressively with other countries around the world and encouraging them to do similar things, and I believe a number of them will,” he told ABC News.

The plan would give the Treasury Department the power to buy bad mortgage debts from troubled financial institutions to head off a disastrous credit freeze that could paralyze the international finance system.

On Monday, Germany said that it had no plans to join in the massive US bailout. Government spokesman Ulrich Wilhelm said that Germany saw no need for such an undertaking, and a foreign ministry spokesman said that the US had made no approach to the Europeans so far.

The G-7 statement said, “We strongly welcome the extraordinary actions taken by the United States to enhance the stability of financial markets and address credit concerns, especially through its plan to implement a programme to remove illiquid assets that are destabilizing financial institutions.”

But the response from individual governments was mixed.

French Finance Minister Christine Lagarde said she had “decided to take no other measure” beyond banning short-selling practices, while Japan’s Vice Finance Minister Kazuyuki Sugimoto said it wasn’t “necessary for Japan to set up a similar programme to the US,” Bloomberg financial news reported.

In Britain, Alistair Darling, chancellor of the exchequer, admitted that the ongoing credit crisis was a “global problem” that required “global solutions,” but added that it needed “not a knee-jerk reaction but a measured response.”

The G-7 finance ministers and central bankers are to meet next month in Washington.

Meanwhile, Chinese President Hu Jintao and US President George W. Bush discussed the US financial crisis Monday by telephone, the Chinese Foreign Ministry said.

Hu told Bush he hoped that US measures to bolster financial markets would soon have an effect and “lead to a gradual recovery,” the ministry said on its website.

Recovery of US financial markets was in the interests of China as well as the US and would benefit the entire global economy, Hu was quoted as saying.

Bush said his government was “well aware of the scope of the problem” and would continue efforts to stabilize US and global financial markets, the ministry reported.

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