G7 vows to stabilize global financial markets


Tokyo : Financial leaders from seven world economic powers vowed Saturday to take both individual and joint action to stabilize financial markets, which had suffered turmoil owing to the US subprime mortgage crisis.

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Finance ministers and central bank governors from Group of Seven (G7) meeting in Tokyo released a joint statement at the end of a one-day forum pledging to secure stability of the global economy.

The G7 leaders expressed concern over the economic outlook by recognizing that “the world confronts a more challenging and uncertain environment” and “downside risks still persist.”

But they said the world’s economic fundamentals as a whole “remain solid” and vowed to “continue to watch developments closely and take appropriate actions, individually and collectively, in order to secure stability and growth in our economies.”

The statement pointed out that “in the US, output and employment growth have slowed considerably and risks have become more skewed to the downside.”

US Treasury Secretary Henry Paulson said after the meeting, however, that he was confident about the long-term health of the world’s largest economy, though it will grow at a slower pace on a “short-term.”

While European Central Bank President Jean-Claude Trichet recognized downside risks would grow, he said that Europe’s economic fundamentals remained “sound.”

To prevent recurrence of subprime meltdown, the members agreed to encourage “full disclosure by financial institutions of their losses and of valuation of structured products.”

Co-chairs of the G7 meeting denied the possibility of concerted efforts among the member states, such as easing credit and providing fiscal stimulus packages.

“We should overcome the current situation by implementing appropriate policy measures in each country,” Japanese Finance Minister Fukushiro Nukaga said.

“Each nation should carry out the necessary steps. Even if everybody does the same thing, the situation would not necessarily improve,” Bank of Japan Governor Toshihiko Fukui said, after co-chairing the meeting among financial ministers and central bank governors from Britain, Canada, France, Germany, Italy, the US and Japan.

On exchange rates, the financial leaders called for China to accelerate its currency reform so as to allow the yuan to float against major currencies.

Concerned over rising crude oil prices, the G7 leaders requested oil-producing nations to increase output and improve refinery capacity, as well as energy efficiency.