G7 finance ministers have urged bold reforms to the world financial system while leaving little doubt that the global economic turmoil is far from over.
Italian Finance Minister Giulio Tremonti called on Saturday for a “new world economic order” as he wrapped up the crisis meeting over which he presided in Rome.
In a joint declaration, the G7 called for “urgent reforms” of the international financial system and reiterated a bleak outlook for the world economy after fresh data showed the eurozone recession deepening.
PHOTO: AFP
Analysts said the initiatives proposed after two days of talks would be tested in April when the G20 emerging and rich nations are to meet in London, with China wielding particular clout.
Beijing came in for special praise in Rome for its “continued commitment to move to a more flexible exchange rate” that would likely lead to the appreciation of the yuan.
The charge that Beijing was letting its currency slip to protect the price of its exports has been a constant source of friction with Washington.
The G20 meeting will be crucial in reinforcing the ambitions of the G7, said analyst Marco Annunziata, chief economist at Italian bank UniCredit.
“The G20 will be far more important because the G7 countries cannot resolve the crisis on their own. They need the help of the emerging economies,” Annunziata said.
“The fact that China is still buying US Treasury bonds is essential,” Annunziata said.
The financial leaders from the G7 grouping of the UK, Canada, France, Germany, Italy, Japan and the US plus Russia met as countries were struggling with the worst economic crisis in decades.
Grim data on Friday showed that the eurozone economy slumped by 1.5 percent in the fourth quarter of last year. The EU overall and several individual EU countries — including G7 host Italy — are also in recession.
The G7 delegates in a joint statement vowed to avoid protectionism as they seek to stabilize the tottering world economy and financial markets and said stabilization of the world economy was their “highest priority.”
The global crisis “has highlighted fundamental weaknesses in the international financial system and that urgent reforms are needed,” the statement said.
US Treasury Secretary Timothy Geithner made his debut on the world stage, after taking office last month and launching a vast US financial stabilization plan that received a skeptical reaction in the US.
He vowed that his country, the biggest economy in the world and the source of much of the financial drama in recent months, would work with other nations for a consensus on reforms.
“We need to begin the process of comprehensive reform of our financial system and the international financial system, so the world never again faces a crisis this severe,” Geithner said after the talks.
“The key elements are to make sure that we’re making banks strong enough that they can be supportive of recovery,” he told reporters. “It will require ways to bring in private capital, provide public capital when that’s necessary and it’s going to require direct action to try to get credit markets working again.”
Geithner assured his counterparts that US President Barack Obama’s US$787 billion plan to resuscitate the economy, approved on Friday, would not violate in any way the US’ commitment to free trade.
Geithner, who was among friends and colleagues he had worked with from his days at the US Federal Bank, appealed to the “common imperative” to sustain open trade.
“These are global challenges and it is imperative that we work together to address them,” he said.
The G7 reiterated the view of several top delegates that protectionism — when countries take measures that favor their own economies at the expense of others — was a threat to stability.
Germany and Japan — net exporters — were especially keen to see the group endorse efforts to fight protectionism, German Finance Minister Peer Steinbrueck said, noting that 40 percent of German output was export-driven.
“This is the reason why we are the most affected by this worldwide recession,” Steinbrueck told a news conference.
French Finance Minister Christine Lagard said the group recognized that protectionism could take many forms in the banking, financial and economic domain.
“The important thing is to coordinate very closely our respective national actions within our relaunch plans, but there were no accusations or criticism against this or that plan, this or that country, so we are all on the same line,” she said.
BACK IN THE NEIGHBORHOOD: The planned transit by the ‘Baden-Wuerttemberg’ and the ‘Frankfurt am Main’ would be the German Navy’s first passage since 2002 Two German warships are set to pass through the Taiwan Strait in the middle of this month, becoming the first German naval vessels to do so in 22 years, Der Spiegel reported on Saturday. Reuters last month reported that the warships, the frigate Baden-Wuerttemberg and the replenishment ship Frankfurt am Main, were awaiting orders from Berlin to sail the Strait, prompting a rebuke to Germany from Beijing. Der Spiegel cited unspecified sources as saying Beijing would not be formally notified of the German ships’ passage to emphasize that Berlin views the trip as normal. The German Federal Ministry of Defense declined to comment. While
‘REGRETTABLE’: TPP lawmaker Vivian Huang said that ‘we will continue to support Chairman Ko and defend his innocence’ as he was transferred to a detention facility The Taipei District Court yesterday ruled that Taiwan People’s Party (TPP) Chairman Ko Wen-je (柯文哲) be detained and held incommunicado over alleged corruption dating to his time as mayor of Taipei. The ruling reversed a decision by the court on Monday morning that Ko be released without bail. After prosecutors on Wednesday appealed the Monday decision, the High Court said that Ko had potentially been “actively involved” in the alleged corruption and ordered the district court to hold a second detention hearing. Ko did not speak to reporters upon his arrival at the district court at about 9:10am yesterday to attend a procedural
‘UPHOLDING PEACE’: Taiwan’s foreign minister thanked the US Congress for using a ‘creative and effective way’ to deter Chinese military aggression toward the nation The US House of Representatives on Monday passed the Taiwan Conflict Deterrence Act, aimed at deterring Chinese aggression toward Taiwan by threatening to publish information about Chinese Communist Party (CCP) officials’ “illicit” financial assets if Beijing were to attack. The act would also “restrict financial services for certain immediate family of such officials,” the text of the legislation says. The bill was introduced in January last year by US representatives French Hill and Brad Sherman. After remarks from several members, it passed unanimously. “If China chooses to attack the free people of Taiwan, [the bill] requires the Treasury secretary to publish the illicit
The Executive Yuan yesterday warned against traveling to or doing business in China after reports that Beijing is recruiting Taiwanese to help conceal the use of forced Uighur labor. The government is aware that Taiwan-based influencers and businesses are being asked to make pro-Beijing content and offered incentives to invest in the region, Executive Yuan acting spokeswoman Julia Hsieh (謝子涵) told a news conference. Taiwanese are urged to be aware of the potential personal and reputational harm by visiting or operating businesses in China, Hsieh said, adding that agencies are fully apprised of the situation. A national security official said that former Mainland