The G7 stand ready to take whatever action is needed to maintain the stability of the financial sector, the group announced on Monday morning after a series of meetings over the weekend and into Monday.
The G7 said they remained committed to protecting the integrity of the international financial system, and welcomed the extraordinary actions taken by the U.S. government and Federal Reserve to stabilize the financial markets, including a plan to remove illiquid assets from the balance sheets of financial institutions.
The G7 also praised their central banks and their action to provide liquidity to the financial system and the limiting or outright banning of short-selling from financial market regulators. Furthermore, they pledged to continue working together to enhance the international regulatory system.
"We recognize the importance of making regulation more effective and bringing investors back into a liquid and stable marketplace. We remain committed to full and rapid implementation of the Financial Stability Forum (FSF) recommendations to enhance the resilience of the global financial system for the longer term," read the statement. "We look forward to the FSF report this fall on progress made in strengthening prudential supervision and regulation, improving firms' risk management practices, enhancing disclosure and transparency, and strengthening accounting frameworks."
The group also maintained that they were in a state of "heightened close cooperation" and reiterated their commitment to acting individually or together to protect the stability of the financial markets.
Following one of the most chaotic weeks in the history of Wall Street, U.S. Treasury Secretary Henry Paulson on Saturday proposed to Congress a $700 billion bailout plan directed at the heart of the crisis.
The plan, which gives the Secretary broad authority to purchase mortgage-related assets from any U.S. financial institution, will be discussed with congressional authorities over the weekend. The White House hopes the action will find agreement before markets open Monday morning.
The action of purchasing masses of bad debt from numerous institutions is hoped to restore confidence in the financial system by clearing up toxic assets obstructing bank-to-bank lending.
By Erik Kevin Franco
©CEP News Ltd. 2008