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G7 passes plan to ease credit woe | |
(about 4 hours later) | |
The G7 group of most industrialised nations has approved a plan aimed at easing the continuing crisis in the global credit markets. | |
Including calls for more oversight of financial firms and greater financial transparency, G7 members have committed themselves to its implementation. | |
The plan also aims to improve the work of credit rating agencies. | |
The announcement was made after a meeting of the seven nations, including the US, UK and Germany, in Washington. | |
"We remain positive about the long-term resilience of our economies, but near-term global economic prospects have weakened," said a statement issued by the G7 after the meeting. | |
The plan further calls for the strengthening of authorities' responsiveness to financial risks, and puts in place arrangements to deal with stress in the financial system. | |
It was drawn up for the G7 by the Financial Stability Forum (FSF) think-tank. | |
The FSF is comprised of a number of central bank and treasury officials from around the world. | The FSF is comprised of a number of central bank and treasury officials from around the world. |
"We have worked, and will continue to work, closely to address global challenges and take concrete actions," said US Treasury Secretary Henry Paulson. | |
'Urgent action' | |
Before the G7 meeting, UK Chancellor Alistair Darling described the credit squeeze as the "biggest economic shock" the world has seen since the 1930s Great Depression. | |
He said the G7 had to take "urgent action". | |
The other G7 members are France, Italy, Japan and Canada. | |
The G7 finance ministers had gathered before World Bank and IMF meetings on Saturday and Sunday. | |
The credit crisis stemmed from a slowdown in the US housing market and 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. |