G7 Officials Meeting Begins At US Treasury Department
By Maya Jackson Randall
Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- Finance ministers and central bank officials from leading industrialized nations have kicked off a critical meeting at the U.S. Treasury Department to discuss ongoing turmoil in the financial markets and measures to stem a crisis that has rapidly spread around the globe.
International stock markets have plummeted this week and credit markets have frozen. Investors are yearning for finance officials this weekend to announce a coordinated plan to ease market tension.
Among other things, Group of Seven officials are expected to discuss a U.K. proposal to help ailing credit markets by guaranteeing interbank lending. They are also reportedly mulling a rewrite of global financial rules.
The G7 includes Canada, France, Germany, Italy, Japan, the U.K. and the U.S.
At the meeting table there also were seats reserved for officials from Russia. The seats, however, were empty when the meeting began. Russia and the G7 countries comprise the Group of Eight leading nations.
Leaders of the International Monetary Fund and the World Bank have repeatedly called for finance officials to take swift, coordinated action in order to prevent a severe, protracted global recession. On Wednesday, the IMF cut its global forecast for growth for this year and next year. It also said the ongoing market challenges are expected to push several mature economies into recession.
"The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s," the IMF said Wednesday in its World Economic Outlook.
Meanwhile, Treasury Secretary Henry Paulson has called for an emergency meeting Saturday of the Group of 20, which includes a set of developed and emerging countries beyond the G7.
"A coordinated response between more than seven countries is the only way to tackle the crisis," said French Finance Minister Christine Lagarde on Friday.
As finance officials try to attack the crisis in a unified way, President George W. Bush made clear that the U.S., where the credit market turmoil began, stands ready to act. He said Friday his administration has all of the tools it needs to restore order to financial markets.
Bush administration officials have said they are considering a plan to guarantee interbank lending and also mulling ways to inject capital into ailing banks.
Administration officials were expected to speak with banking sector representatives on a conference call Friday afternoon. And Bush is scheduled to meet with G7 finance ministers Saturday morning.
Treasury Secretary Henry Paulson was slated Friday to meet with economic officials from Saudi Arabia and Japan. On Saturday, the Treasury secretary is scheduled to meet with finance ministers from the U.K., Canada, Russia, Argentina, Chile, Peru, Colombia, Mexico and Uruguay.