Whatever it takes! G7 vows to freeze meltdown

ANTI-DEPRESSANTS? Group of Seven bank governors pose for a group photo after their meeting in Washington.

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New Delhi: The world's seven leading economies agreed to do everything in their power to tackle a financial crisis that threatens to plunge the world into recession, but unveiled no new joint measures after their meeting.

The Group of Seven (G7) finance ministers and central bank heads said after their meeting on Friday they would use "all available tools" to stabilise the financial system and unblock credit markets that have come to a virtual halt in the United States and Europe.

US Treasury Secretary Henry Paulson called for "an aggressive action plan" and the brief reflected a common approach of the world's big economic powers.

The G7 agrees that the situation calls for an immediate action as the economies around the world are on the brinks of collapse.

• Take decisive action and use all available tools to prevent "important" institutions from failing.

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• Take steps to unfreeze credit and money markets and ensure that banks and other institutions have broad access to liquidity and funding.
• Ensure that banks and other major financial intermediaries can raise enough capital from public and private sources to re-establish confidence and kick start lending to individuals and businesses.
• Ensure that each country's deposit insurance programs are strong and consistent to assure depositors their money is safe.
• Take action to restart the secondary markets for mortgages and other securitized assets.

"The G7 agrees today that the current situation calls for urgent and exceptional action," read a joint statement. Governments would "take all necessary steps to unfreeze credit and money markets".

The meeting in Washington came as stocks around the world plunged in record levels this week amid widespread fears of a global recession.

There were no specific joint moves announced, but the group did suggest all seven governments were ready to throw public funds into banks that are threatened with collapse for a lack of capital.

The seven countries promised to "ensure that our banks can raise capital from public as well as private sources in sufficient amounts to re-establish confidence and permit them to continue lending to households and businesses."

On the sidelines of the meeting, some G7 members said they were planning to take equity stakes in their banks as part of a broader rescue plan and injection of capital.

Treasury Secretary Henry Paulson said the US would buy shares in financial institutions in return for taking on their troubled mortgage assets, under authority already granted in the $700-billion rescue package approved by Congress last week.

German Finance Minister Peer Steinbrueck said a similar plan for Germany would be unveiled on Monday. Britain passed its own bail-out package earlier this week.