Finance officials from the world's wealthiest nations pledged at a
meeting in London Saturday to maintain stimulus measures to boost the
global economy, warning that the fledgling recovery that provided the
backdrop to their meeting is by no means assured.
Even though there are some early signs that the recession may be starting to fade in places like Germany, France and Japan, the finance chiefs vowed to keep spending.
U.S. Treasury Secretary Timothy Geithner agreed. "We need to provide sustained support for growth and financial repair until we have in place a strong foundation for recovery," he said.
Economists point out that withdrawing too early from the trillions of dollars worth of stimulus packages that have been pumped into the world economy over the past few month could result in a another downturn, creating a so-called double-dip recession.
Geithner also warned that one of the last factors to improve in any downturn is unemployment He said that governments must continue to work on this area.
"The financial system is showing signs of repair, growth is now under way," said Geithner. "However, we still face significant challenges ahead. Unemployment is unacceptably high. Conditions for a sustained recovery, led by private demand, are not yet established."
The London weekend meeting provided a forum to develop common ground before the next G-20 summit in the U.S. city of Pittsburgh in three weeks.
Treasury Secretary Geithner said that while action by central banks and governments has pulled the global economy back from the edge, it's important that reform continues.
"As we look towards the summit in Pittsburgh, we need to bring the sense the same sense of common purpose and urgency that we demonstrated at the peak of the crisis to the challenge of restoring growth and to reforming the financial system," he said. "We made a lot of progress bet we have got a way to go and we cannot let momentum for reform fade as the crisis recedes."
The finance officials here also pledged in general terms to put restrictions on excess bankers' bonuses. Many blame that bonus culture for fueling the current crisis.
They also discussed a U.S. proposal to require international banks to maintain deeper reserves so they would be able to cover any potential loan losses that might arise in the future.