G-7 announces plan to fight global financial crisis

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(Xinhua)
Updated: 2008-10-11 09:49

WASHINGTON -- Finance officials from the Group of Seven (G-7) announced here Friday a plan of action to battle the ongoing global financial crisis.

"The G-7 agrees today that the current situation calls for urgent and exceptional action," said a statement released by the US Treasury Department announcing the plan of action.

"We commit to continue working together to stabilize financial markets and restore the flow of credit, to support global economic growth," it said.

According to the statement, the G-7 will "take decisive action and use all available tools to support systematically important financial institutions and prevent their failure."

The world's seven major economies will also 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.

It will "ensure that our 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."

Meanwhile, member of the group will ensure that "our respective national deposit insurance and guarantee programs are robust and consistent so that our retail depositors will continue to have confidence in the safety of their deposits."

In addition, the G-7 will "take action, where appropriate, to restart the secondary markets for mortgages and other securitized assets."

The plan of action was announced after G-7 finance ministers and central bank governors met here Friday before the annual meetings of the International Monetary Fund and its sister institution World Bank.

The G-7 meeting, which brought together financial officials of the United States, Germany, Japan, France, Britain, Italy and Canada, was held amid a stunning loss of confidence in the global financial system that has sent markets into a freefall.

"The actions should be taken in ways that protect taxpayers and avoid potentially damaging effects on other countries," the statement said, adding that "we will use macroeconomic policy tools as necessary and appropriate."

"We will strengthen further our cooperation and work with others to accomplish this plan," the G-7 pledged.