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G7 Communique Pledges Action To Restore Credit Flows

The G7 Finance Ministers, meeting in Washington, have pledged to take “urgent and exceptional action” to “stabilize financial markets and restore the flow of credit”.

What is the G7?

The G7, Group of Seven, is made up of the finance ministers of the United States, the United Kingdom, Germany, Italy, France, Japan and Canada. They meet periodically to discuss economic issues.

The G8 consists of the heads of governments of the same countries, plus Russia.

This is the text of the G7 Communique:

The following is the communique issued by finance ministers and central bankers of the Group of Seven nations:

The G-7 agrees today that the current situation calls for urgent and exceptional action. We commit to continue working together to stabilize financial markets and restore the flow of credit, to support global economic growth. We agree to:

1. Take decisive action and use all available tools to support systemically important financial institutions and prevent their failure.

2. Take all necessary steps to unfreeze credit and money markets and ensure that banks and other financial institutions have broad access to liquidity and funding.

3. Ensure that our banks and other major financial intermediaries, as needed, 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.

4. Ensure that our respective national deposit insurance and guarantee programs are robust and consistent so that our retail depositors will continue to have confidence in the safety of their deposits.

5. Take action, where appropriate, to restart the secondary markets for mortgages and other securitized assets. Accurate valuation and transparent disclosure of assets and consistent implementation of high quality accounting standards are necessary.

The actions should be taken in ways that protect taxpayers and avoid potentially damaging effects on other countries. We will use macroeconomic policy tools as necessary and appropriate. We strongly support the IMF’s critical role in assisting countries affected by this turmoil. We will accelerate full implementation of the Financial Stability Forum recommendations and we are committed to the pressing need for reform of the financial system. We will strengthen further our cooperation and work with others to accomplish this plan.

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Malcolm Farnsworth
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