G7 vows action to douse global firestorm
WASHINGTON: Group of Seven finance chiefs Friday unveiled a five-point plan to fight the global economic firestorm and restore confidence in the financial system by shoring up struggling banks. “The G7 agrees today that the current situation calls for urgent and exceptional action,” the US Treasury said in a statement on behalf of the G7 nations. “We commit to continue working together to stabilize financial markets and restore the flow of credit, to support global economic growth,” it added after the finance ministers and central bank chiefs from the G7 nations — the United States, Germany, Japan, France, Britain, Italy and Canada — met in Washington. Treasury Secretary Henry Paulson said it was an “aggressive” plan to “address the turmoil in global financial markets and the stresses on our financial institutions.”Washington would start moving “as soon as we can” to inject capital into troubled banks, he told journalists. “We”re going to do it as soon as we can do it and do it effectively.” And he added: “We are in close coordination and communication with Japan and China and other investors around the world.” Under the G7 plan, the economic powers would seek to ensure that banks “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.” The seven nations also committed to taking decisive measures to stop further bank collapses and unfreeze credit lines to pump more liquidity into the market. The move came after global stock markets went into a freefall Friday as panicked investors found no place to hide, even though Wall Street managed to stem the losses in a stomach-churning session of ups and downs. Some markets plunged 10 percent in the worst performance since the 1987 stock crash as part of a global meltdown that began with Tokyo’’s 9.6 percent nosedive. “If you could measure the overall confidence level of investors, it would likely be so low that it would frighten the rest of the longs out of the market,” said Kevin Giddis at Morgan Keegan.
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