'Private sector should help settle markets'
Saturday, April 12, 2008
FINANCE chiefs from rich nations meet yesterday to bless proposals for tightening scrutiny of global banking practices and to press the private sector to step up its efforts to settle financial markets.
Group of Seven finance ministers and central bankers started to review a hefty set of recommendations from a blue-ribbon study group, the Financial Stability Forum, for calming a markets crisis that has rippled across the globe since last summer and may eventually cost as much as US$1 trillion in losses.
Indications before yesterday's meeting were that most G7 members already accept the proposals, including measures to improve risk management so banks aren't caught short of cash as occurred this year when credit markets seized up.
"I expect the recommendations of the FSF, perhaps amended somewhat, will be adopted by the ministers and central bankers," Canadian Finance Minister Jim Flaherty said on Wednesday as he briefed reporters ahead of the G7 meeting.
The next step will be to push bankers to match the vigour of the efforts that global central banks have shown in battling the liquidity squeeze by urging these private-sector players to quickly put their losses behind them and resume lending.
The G7 comprises the United States, Britain, Canada, France, Germany, Italy and Japan. US Treasury Secretary Henry Paulson clearly stated his position on Thursday that he wants banks to be ready to play their role as a market stabiliser.
"If you think you're going to need capital, don't be looking for the government to help you," Paulson said after addressing the Council of Institutional Investors. "If you think you need capital, go raise it."
Bank of Japan Governor Masaaki Shirakawa earlier said the G7 countries "need to show a clear determination towards stabilising the financial system".
The crisis ricocheted through the global economy as securities cobbled together on Wall Street from bits and pieces of mortgage loans turned sour.
Reuters
Group of Seven finance ministers and central bankers started to review a hefty set of recommendations from a blue-ribbon study group, the Financial Stability Forum, for calming a markets crisis that has rippled across the globe since last summer and may eventually cost as much as US$1 trillion in losses.
Indications before yesterday's meeting were that most G7 members already accept the proposals, including measures to improve risk management so banks aren't caught short of cash as occurred this year when credit markets seized up.
"I expect the recommendations of the FSF, perhaps amended somewhat, will be adopted by the ministers and central bankers," Canadian Finance Minister Jim Flaherty said on Wednesday as he briefed reporters ahead of the G7 meeting.
The next step will be to push bankers to match the vigour of the efforts that global central banks have shown in battling the liquidity squeeze by urging these private-sector players to quickly put their losses behind them and resume lending.
The G7 comprises the United States, Britain, Canada, France, Germany, Italy and Japan. US Treasury Secretary Henry Paulson clearly stated his position on Thursday that he wants banks to be ready to play their role as a market stabiliser.
"If you think you're going to need capital, don't be looking for the government to help you," Paulson said after addressing the Council of Institutional Investors. "If you think you need capital, go raise it."
Bank of Japan Governor Masaaki Shirakawa earlier said the G7 countries "need to show a clear determination towards stabilising the financial system".
The crisis ricocheted through the global economy as securities cobbled together on Wall Street from bits and pieces of mortgage loans turned sour.
Reuters
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