G7 finance officials pledge action to end financial crisis
Last Updated: Friday, October 10, 2008 | 9:54 PM ET
CBC News
Canadian Finance Minister Jim Flaherty, left, joins Group of Seven finance representatives and others outside the U.S. Treasury Department in Washington on Friday. Next him, from left to right, are: France's Christine Lagarde, Germany's Peer Steinbrueck, the U.S.'s Henry Paulson, Italy's Giulio Tremonti, Japan's Shoichi Nakagawa and the U.K.'s Alistair Darling. (J. Scott Applewhite/Associated Press) Finance officials from the G7 countries announced a series of measures Friday to try to slow the effects of a financial crisis that is crippling markets around the globe.
Finance ministers, as well as bank heads from the Group of Seven countries — the most powerful economic nations in the Western world — pledged to take "decisive action and use all available tools" to ease the crisis.
The group issued a five-point plan Friday evening after a meeting in Washington with U.S. Treasury Secretary Henry Paulson and U.S. Federal Reserve chairman Ben Bernanke.
"The G7 agrees today that the current situation calls for urgent and exceptional action," read a statement issued at the end of the meeting. "We commit to continue working together to stabilize financial markets and restore the flow of credit, to support global economic growth."
According to the statement, the G7 has pledged to:
- Take decisive action and use all available tools to support systemically important financial institutions and prevent their failure.
- Take all necessary steps to unfreeze credit and money markets and ensure that banks and other financial institutions have broad access to liquidity and funding.
- Ensure that banks and other major financial intermediaries, as needed, can raise capital from public as well as private sources, in sufficient amounts to re-establish confidence and permit them to continue lending to households and businesses.
- Ensure that respective national deposit insurance and guarantee programs are robust and consistent, so that retail depositors will continue to have confidence in the safety of their deposits.
- Take action, where appropriate, to restart the secondary markets for mortgages and other securitized assets. Accurate valuation and transparent disclosure of assets and consistent implementation of high-quality accounting standards are necessary.
The countries said the plan should be undertaken in ways that "protect taxpayers and avoid potentially damaging effects on the countries," according to the statement.
The group also said it strongly supports the International Monetary Fund's "critical" role in assisting countries affected by the turmoil.
Canada, the United States, Japan, Germany, Britain, France and Italy are all included in the Group of Seven countries. The finance officials are scheduled to meet with U.S. President George W. Bush on Saturday at the White House for further discussions.
Finance Minister Jim Flaherty on Friday announced new measures to ease pressure on financial institutions and stabilize the lending market, in an attempt to assuage concerns over the burgeoning global financial crisis. (CBC) Canadian Finance Minister Jim Flaherty, who was in Washington Friday afternoon, said the G7 measures "are consistent with what we have been doing in Canada in terms of liquidity, in terms of insuring adequate capitalization of our regulatory system .… There's a consistency there, which is of course why we wholeheartedly supported the proposed plan of action."
Earlier in the day, Flaherty announced his government's plan to pay $25 billion for securities through Canada Housing and Mortgage Corp. and provide much-needed cash to financial institutions that sell National Housing Act mortgage-backed securities.
Flaherty announced the new measures in an attempt to assuage concerns over the burgeoning global financial crisis and defuse criticism that the Conservative government was ignoring the spreading lending crisis.
Speaking at a news conference Friday night in Washington, Bank of Canada chief Mark Carney also vowed to take aggressive steps to counteract an economic slide at home.
"We've put in place key measures in Canada — we'll do more if necessary," Carney said.
Meanwhile, Paulson said the U.S. government will move ahead with a plan to buy stock in financial institutions. The Bush administration received authority to make direct purchases of stock in banks in the $700-billion US financial rescue bill that Congress passed last week.
Bush tries to reassure public
On Friday, Bush sought to assure the American public that governments worldwide were hard at work to counter the economic turmoil. He called for co-operation among the U.S. and other nations.
"We've seen that problems in the financial system are not isolated to the United States," he said Friday morning in brief remarks from the White House Rose Garden.
"So we're working closely with partners around the world to ensure that our actions are co-ordinated and effective."
Members countries from the Group of 20 will meet with Paulson in Washington on Saturday evening to discuss the crisis, which is also expected to dominate discussion at weekend meetings of the 185-country IMF and the World Bank in Washington.
With files from the Associated Press
