News / USA

World Finance Leaders Cheered by Signs of Recovery

William Ide

Global economic leaders declared Friday that the world economy is recovering better than expected from its worst recession in decades, and committed to continue efforts to ensure a sustained worldwide rebound.

Friday's meetings of central bank governors and finance ministers of the world's Group of 20 nations in Washington D.C. credited massive government stimulus programs for ending the financial panic that gripped the global economy a year ago.

The meeting's message was similar to one issued last September, when G-20 heads of state laid out broad principles on enacting regulatory reform, securing economic recovery, and rebalancing global growth.

Canadian Finance Minister Jim Flaherty said the work of economic officials in hammering out policy ideas to guide the recovery was far from over. "Following today's meeting, we are well on our way to delivering an initial set of policy options for consideration and agreement for G20 leaders," he said.

G-20 finance ministers will meet again in South Korea in early June, ahead of a leaders summit in Toronto later that month.

Flaherty says a six-page communiqué released at the end of the meeting on Friday reaffirmed the G-20's commitment to financial sector reform and the need to improve the quality and quantity of bank capital, strengthen liquidity standards, and discourage excessive leverage.

The joint statement from world economic leaders did not mention the Greek debt crisis, but it did say that countries were committed to continue to ensure the world's rebound from the recession.

Flaherty said the situation in Greece was discussed during Friday's meetings. He says that it is a "source of concern" and noted that it is undermining the confidence of markets. "It's essential that some steps be taken, that the Greek government work with the IMF (International Monetary Fund) and with the European Commission, of course, to identify a credible, multi-year economic and fiscal program that will meet this problem of fiscal issues," he said.

The debt crisis in Greece threatened to overshadow the G-20 talks, which come a day ahead of meetings on Saturday and Sunday of the International Monetary Fund and the World Bank.

Just before meetings began on Friday the 186-nation IMF issued a statement, promising the organization was prepared to move quickly to review a request from the Greek government for an emergency loan package.

During their meetings G-20 leaders failed to reach an agreement on proposed bank taxes that would help keep taxpayers from being saddled with the cost of future financial bailouts. Those taxes would also be aimed at restraining the kind of excessively risky bets that sent the global economy into its worst tailspin since World War Two.

Canada is leading the opposition to the new bank taxes. Critics of the plan say it would be unfair to banks that did not suffer costly failures during the recent crisis.

Speaking at a news conference after Friday's meetings U.S. Treasury Secretary Timothy Geithner said that he believed there was a broad consensus among G-20 countries on ways to approach a financial overhaul and stressed the importance of the United States setting an example.  "(It's) very important that the rest of the world sees the United States acting forcefully to make sure that we're not going to be a source of instability in the future, that the US can be a source of strength, a source of growth, a source of stability to the global financial system in the future," he said.

As for future global problems, the G-20 repeated a pledge that all countries will work to eliminate dangerous imbalances, but it avoided prodding China to allow its currency to appreciate against the dollar, a key U.S. aim.

The G-20 is composed of the world's wealthiest industrial countries plus major emerging economies such as China, Brazil, India, South Korea and Russia. The United States was represented by Treasury Secretary Geithner and Federal Reserve Chairman Ben Bernanke.

In addition to discussions as a group, the G-20 ministers held a series of separate meetings throughout the day Friday with individual countries.

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