World’s richest countries pledge to fix economy

Geithner: A common recognition exists among nations to restart credit markets.
The world’s richest countries committed to "any further action that may prove necessary" to restore confidence in the global financial system, their finance ministers said as they wrapped up a two-day meeting in Rome.

The Group of Seven finance ministers also urged countries not to close their markets to goods and services from abroad. “An open system of global trade and investment is indispensable for global prosperity,” they said in a statement at the end of their meeting Saturday. “Protectionist measures… would only exacerbate the downturn” in the worldwide economy. The ministers said the global banking crisis had revealed “fundamental weaknesses in the international financial system” and called for urgent reform. New U.S. Treasury Secretary Timothy Geithner, making his international debut at the meetings, called on governments to focus on stabilizing and strengthening financial systems and help restart the flow of credit. “Although the precise mix of measures must be tailored to each country’s situation — our financial systems are different, (the) structures of our systems are very different — there is a common recognition of more capital and government financing to help restart credit markets,” he said.

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Italy hosted the meeting of the Group of Seven in its role as G7 president for 2009. G7 members are the United States, Germany, Japan, France, Italy, Britain and Canada. The agenda drawn up by Rome calls for adopting global measures and economic policy reforms capable of stabilizing the world economy and ensuring transparency to allow markets to function correctly. Geithner spoke just after the U.S. Senate gave final approval to a $787 billion recovery package to boost the U.S. economy. He told attendees that the package “provides a very powerful mix of investments and tax cuts to create jobs and to strengthen our long-term growth potential.” “As we act together to build a strong foundation for economic growth and recovery, we need to begin the process of comprehensive reform of our financial system, so that we never again face a crisis of this severity,” Geithner said. Another attendee, International Monetary Fund head Dominique Strauss-Kahn, said this week he supports such stimulus packages for advanced countries.

“The question is no more to convince the governments to move today, but for them to implement the policies they need to manage,” Strauss-Kahn said. He also warned of the dangers of protectionism, which he said may still come “through the back door, especially in the financial sector.”