IMF backs G7 financial crisis plan
Eurozone ministers ready for crisis meeting as leaders stress “co-ordinated action”.
Unified response
The G7 hopes its display of unity will calm investors, although there were no concrete offers of new moves beyond the plan’s pledgeds of co-operation, decisive action and the “use of all available tools to support systemically important financial institutions and prevent their failure”.
Speaking from outside the White House, Al Jazeera’s correspondent Rosiland Jordan said: “The G7 is not known for coming out with detailed plans, so it’s not surprising there was just a list of generalities.”
But the IMF’s International Monetary and Financial Committee (IMFC) said it “strongly endorsed” the G7 plan and said it would make funds available to countries that needed them.
“Using its emergency procedures, the Fund stands ready to quickly make available substantial resources to help member countries cover financing needs,” the IMFC said in a statement.
Over the past few days Dominique Strauss-Khan, the IMF head, has repeatedly called for nations to co-operate in their responses to the crisis.
Global initiative
Bush went on to attend an emergency meeting of G20 rich and emerging countries, a group that includes emerging giants Brazil, Russia, China and India alongside the G7 industrialised nations.
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The G20 members “committed to using all the economic and financial tools to assure the stability and well functioning of financial markets,” a statement said after a meeting in Washington on Saturday.
They also agreed to ensure that measures taken to ease the crisis “are closely communicated so that the action of one country does not come at the expense of others or the stability of the system as a whole”.
The G20 group, formed in 1999, accounts for about 85 per cent of the world’s economy.
In Europe, Nicolas Sarkozy, the French president, and Angela Merkel, the German chancellor, met on Saturday in France, putting on a show of unity the day before a Paris summit of 15 eurozone leaders and Gordon Brown, the British prime minister.
The heads of the eurozone’s two biggest economies are seeking a joint response to the crisis, which may include a British-style plan of partial bank nationalisation.
“We are analysing the crisis together. Germany and France have perfectly identical views on the consequences to take from that for the short, medium and long term,” Sarkozy said.
Speaking from Washington, Christine Lagarde, the French economy minister, vowed that eurozone countries would announce “concrete” measures to combat the financial crisis.
Greater supervision
Merkel said that Paris and Berlin were “on the same path as regards putting in place a concerted and coherent reaction for the eurozone” but noted that within this there was “naturally room for manoeuvre for each member state”.
The German government is putting the finishing touches to a rescue plan that is expected to provide hundreds of billions of euros to shore up banks.
Germany also urged an overhaul of how the world’s financial system is supervised.
“It is important to create an entirely new and global supervision of finance by the IMF,” Frank-Walter Steinmeier, Germany’s foreign minister, told Der Spiegel magazine due to be published Monday.
“The IMF is the only instrument established with a wide area of responsibility and high authority over the markets.”
Meanwhile, a top Chinese central banker criticised rich nations for the problems in the global financial system, and called on the IMF to improve its monitoring of developed nations which had “weak financial policy discipline”.
“The major reserve issuing countries should shoulder the responsibility for preventing further spillovers and minimising shocks to other countries,” Yi Gang, deputy governor of the People’s Bank of China, told the IMF meeting in Washington.
Stock markets around the world have seen huge losses as a result of the crisis and there is little indication they will recover when they open again on Monday.