Chinese currency

The Group of Seven (G7) said it welcomed steps by China to increase the flexibility of its currency, the yuan.

But added: "In view of its rising current account surplus and domestic inflation, we stress its need to allow an accelerated appreciation of its effective exchange rate."

The US and several of its trading partners have repeatedly urged China to adopt a more flexible currency regime, contending that the Chinese yuan is being held artificially low, thus giving Chinese exports an unfair advantage on world markets.

Weak dollar

The ministers made no mention in their final statement of the steadily eroding dollar, notably against the euro.

But Paulson said: "I believe a strong dollar is in our nation's interest."

Ahead of the meeting, several euro-zone officials had made no secret of their fears that the weak dollar, and strong euro, could restrict exports and growth in the 13-nation bloc.

While the global economy is now in the fifth year of "robust" momentum, "recent financial market turbulence, high oil prices, and weakness in the US housing sector will likely moderate this growth," the ministers and central bankers said.

Needed action

The meeting also called for action to prevent future turmoil, stressing that market players had to police themselves.

"We expect market participants to address many of the shortcomings that were exposed by recent events," the statement said.

The US has been criticised for allowing loose lending practices to flourish in a climate of low interest rates, which fuelled a years-long housing boom, speculation and the emergence of little-understood complex financial instruments backed by mortgages.

The real estate bubble burst last year, triggering loan defaults and foreclosures as well as a credit crunch that spread worldwide, roiling markets in August.

"Our response to recent financial turbulence must be based on full analysis of its causes," the G7 statement said.