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World leaders look for joint action on economy

(China Daily)
Updated: 2008-10-13 07:15

Top finance officials from the 20 major economies pledged over the weekend to work together to find solutions to the worsening financial turmoil, which they believe is the worst since the Great Depression.

European leaders were also meeting last night in Paris to search for a common response to the spreading crisis, a job made more difficult by the different situations and systems across the EU bloc.

Among the issues on the table is the possibility of nations guaranteeing loans between banks to try and get the credit markets working again.

General view of the leaders of the euro zone countries attending a meeting at the Elysee Palace in Paris October 12, 2008. France's President Nicolas Sarkozy and leaders of euro zone countries hold an emergency meeting in Paris to agree on specific, pan-European measures to prop up the battered financial sector and halt market panic. [Agencies]

The latest moves follow meetings of the Group of Seven (G7) industrialized nations, the annual sessions of the International Monetary Fund (IMF) and World Bank, and finance ministers of 20 major economies on Friday and Saturday in Washington.

US President George W. Bush, after meeting on Saturday with finance ministers from the world's wealthiest economies, said: "We will do what it takes to resolve the crisis."

Meanwhile, the high-profile officials of the 20 major economies, both developed and developing, released a statement, in which they pledged to work together and to use "all necessary tools to overcome the financial turmoil, and to deepen cooperation to improve the regulation, supervision and the overall functioning of the world's financial markets".

"The depth and systemic nature of the crisis call for exceptional vigilance, coordination and readiness to take bold action," the IMF said in its statement.

Related readings:  Bush: US will work with partners on credit crisis  World powers pledge to combat credit crisis  China could weather through financial crisis - WB chief  G-7 announces plan to fight global financial crisis  US bailout 'will be rolled out quickly'  Italy to follow UK bailout plan  Fuld: Where was Lehman's bailout?  A bailout for failed investment bankers?

"There is a resolve in the international community that this crisis will be resolved, that no tools will be spared to address its ramifications," said Youssef Boutros Ghali, Egypt's finance minister and the new chairman of the IMF's policy panel.

US Treasury Secretary Henry Paulson announced late on Friday the government intended to buy part ownership in a number of American banks, equal to partially nationalizing the industry. It would be the first such move in the US since the 1929 Great Depression.

"The international community has expressed its commitment to joining hands to fight the crisis," said Hua Min, director of Fudan University's Institute of World Economy. "But given their different situations, the major economies may have different readings of the crisis."

They have suffered varied levels of impact from the financial crisis and, therefore, some of them are not very keen to show their hand, he said.

In the UK and Iceland, for example, things have become fairly serious and the governments of both countries must take immediate action. But in France and Germany, the financial institutions are not facing such a dire situation as in the US or the UK.

Lack of consensus among the major economies could offset the effect of global efforts to resolve it, said Zhao Xijun, finance professor at Renmin University of China.

"Some countries may have underestimated the potential impact of the crisis."

Nations move to beat financial woes

The following is an update of measures governments across the world are scrambling to take to offset the impact of the financial crisis.

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