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Darling calls for economic action | |
(about 6 hours later) | |
Chancellor Alistair Darling has described the credit squeeze as the "biggest economic shock" the world has seen since the 1930s Great Depression. | |
Speaking in Washington DC before the start of a meeting of the G7 group of most industrialised nations, he said the seven had to take "urgent action". | |
Yet Mr Darling also cautioned that such action meant better regulation rather than the temptation to simply add more. | |
G7 ministers have gathered before World Bank and IMF meetings at the weekend. | |
The G7 finance ministers are tipped to debate proposals including better oversight of banks and how to maintain access to capital. | |
They are also expected to address the wide variation in currency exchanges, particularly the weak US dollar. | They are also expected to address the wide variation in currency exchanges, particularly the weak US dollar. |
Slowdown | Slowdown |
The Financial Stability Forum (FSF) think-tank is set to make a list of recommendations that G7 leaders will discuss. | |
"We look forward to discussing and implementing rapid and effective implementation of the FSF findings with our colleagues," said US Treasury Under-Secretary David McCormick. | "We look forward to discussing and implementing rapid and effective implementation of the FSF findings with our colleagues," said US Treasury Under-Secretary David McCormick. |
Among the expected proposals are increased transparency about the risks banks undertake, stricter rules about credit ratings, and the role of central banks in pumping money into the finance system. | Among the expected proposals are increased transparency about the risks banks undertake, stricter rules about credit ratings, and the role of central banks in pumping money into the finance system. |
The credit crisis, that stemmed from a slowdown in the US housing market, has had a knock-on effect worldwide and dented growth. | The credit crisis, that stemmed from a slowdown in the US housing market, has had a knock-on effect worldwide and dented growth. |
Earlier this week the International Monetary Fund (IMF) forecast that the US would enter a "mild recession" in 2008 and said that the credit crunch could cost banks and other financial institutions around $1 trillion. | Earlier this week the International Monetary Fund (IMF) forecast that the US would enter a "mild recession" in 2008 and said that the credit crunch could cost banks and other financial institutions around $1 trillion. |
The weakening US economy has been a major factor in pushing down the value of the dollar, which slipped to a 15-year low against the pound earlier in the week. Meanwhile the pound has fallen sharply against the euro. | The weakening US economy has been a major factor in pushing down the value of the dollar, which slipped to a 15-year low against the pound earlier in the week. Meanwhile the pound has fallen sharply against the euro. |
The G7 members are the US, Britain, France, Germany, Italy, Canada and Japan. | The G7 members are the US, Britain, France, Germany, Italy, Canada and Japan. |