Reassurances about debt-strapped Greece and an agreement that banks should pay for future rescue funds capped an international meeting in Canada’s Arctic as European policymakers sought to convince jittery markets that they have things under control.
Ministers and central bank governors said economies were recovering from recession, but stuck to their view that it was too early to withdraw government help.
In a statement issued on Saturday after two days of G7 talks, European Central Bank President Jean-Claude Trichet said he believed Greece would meet tough targets to lower its budget gap.
PHOTO: AP
“We expect and we are confident that the Greek government will [make] all the decisions that will permit it to reach that goal,” Trichet said.
French Finance Minister Christine Lagarde said euro zone countries would make sure the Greek plan was implemented and Jean-Claude Juncker, chairman of the group of euro zone finance ministers, dismissed the idea Greece would need money from the IMF.
World stock markets slumped to three-month lows on Friday on fears that Greece’s crisis would spread and the euro fell to its lowest level against the US dollar in eight-and-a-half months.
Earlier, officials from the G7 — comprising Britain, Canada, France, Germany, Italy, Japan and the US — said support was rising for a levy on banks that could pay for global governments’ rescue of the financial system, but such a levy would have to be designed so it did not derail a tentative economic recovery, they said.
US Treasury Secretary Timothy Geithner played down differences between countries on banking reform.
Last month the administration of US President Barack Obama stunned the banking industry with tough reform proposals that took other countries by surprise too.
“We all share a deep commitment to try to move forward and reach agreement on a strong, comprehensive set of financial reforms on the timetable we all committed to last September,” he said. “That means agreement on ... a new set of capital requirements for large global institutions by the end of this year.”
Iqaluit, the town that hosted the meeting, was the most exotic location for a G7 meeting to date, offering food that included Arctic char and muskox minestrone. A shortage of commercial flights and the distances involved meant most ministers used government jets.
Geithner said that the G7 underscored its commitment to reinforcing recovery, while Canada’s Jim Flaherty said the global economy was improving but still needed government help.
“We do not have a firmly established recovery yet, but there are signs,” he said.
The US and other big economies are also saddled with debts, having spent heavily to stave off a depression.
Ratings agency Moody’s Investors Service this week said the US must do more to keep its AAA rating after the Obama administration said it expected a deficit equivalent to 10.6 percent of GDP this year, more than three times the level considered sustainable by economists.
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