World leaders vow to battle economic crisis
World leaders, warning of a global economic downturn, pledged Saturday to work together to find solutions to what is unfolding as the worst financial crisis since the Great Depression, CNN reported.
U.S. President George W. Bush and finance officials from the Group of Seven, Group of 20 and the International Monetary Fund -- gathering in the nation's capital -- vowed vigilance in helping economies around the world on the road to recovery.
Concerns about the solvency of banks and financial institutions in recent weeks "had pushed the global financial system to the brink of systemic meltdown," said Dominique Strauss-Kahn, IMF managing director.
Strauss-Kahn said steps taken so far by the United States and European nations hadn't been fully effective and that more would be necessary in "the coming months."
For his part, Bush did not announce any new actions to stem the financial panic gripping the world, but reiterated measures world leaders are taking to strengthen financial systems.
"We recognize that the turmoil in the financial markets is affecting all our citizens," Bush said early Saturday morning. "All of us recognize this is a serious global crisis that requires a serious global response for the good of our people."
Both Bush and U.S. Treasury Secretary Henry Paulson spoke about the latest step being contemplated by the United States -- injecting much-needed capital into banks.
"In recent weeks, financial market turmoil intensified throughout the world and credit markets froze, causing a chain reaction resulting in non-financial companies experiencing difficulty in financing normal business operations," Paulson told an IMF meeting.
The Bush administration is considering whether to use the authority granted in the $700 billion rescue plan enacted on Oct. 3 to take ownership stakes in financial institutions to stabilize and restore confidence in them.
Other countries are also taking action to inject liquidity, protect citizens' savings and strengthen financial institutions in their own nations, he said.
Finance leaders from the world's top economies, the Group of Seven, pledged Friday night to take steps to keep leading institutions afloat, unfreeze credit, and ensure banks have enough capital to kick start lending and safeguard depositors' funds and restart the secondary markets for mortgages and other securitized assets.
Bush said that it is vital that countries work together so that their actions don't undermine others. He pointed to the emergency interest rate cut enacted this week as an example of a coordinated effort.
He plans to expand discussions beyond the G-7 ministers -- representing the United States, Britain, Canada, France, Germany, Italy, and Japan -- to the leaders of the G-20 emerging market and industrialized nations.
"We're in this together, we'll come through this together," the president said.
But Bush warned that it will take time to see the results. So far, all the measures world leaders have taken have done little to calm jittery markets.
"The benefits will not be realized overnight," he said.
Bush made a surprise visit Saturday at a G-20 meeting of finance ministers and central bankers.
Officials of the G-20 issued a statement late Saturday saying that the "global implications" of the crisis required international cooperation.
The G-20 is made up of rich and emerging nations that produce 90 percent of the world's economic output. The meeting in Washington came at Paulson's request. Federal Reserve Chairman Ben Bernanke was also in attendance.