G7 nations pledge action to ensure stability

Tue Sep 23, 2008 12:23am EDT
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By David Lawder and James Mackenzie

WASHINGTON/PARIS (Reuters) - Group of Seven nations welcomed the $700 billion U.S. markets bailout plan on Monday and said they were prepared to step up international cooperation to protect the world's financial and banking system.

But a day after U.S. Treasury Secretary Henry Paulson said he was "aggressively" encouraging other countries to put in place bailout packages of their own, there was little sign other G7 governments were prepared to follow Washington's lead.

"We pledge to enhance international cooperation to address the ongoing challenges in the global economy and world markets and maintain heightened close cooperation between finance ministries, central banks and regulators," the G7 ministers said in a statement following a conference call on Monday lasting 15-20 minutes.

"We are ready to take whatever actions may be necessary, individually and collectively, to ensure the stability of the international financial system," they said.

The statement, a few weeks before G7 finance ministers and central bank governors meet in Washington on October 10, follows a tumultuous week that started with the demise of Lehman Brothers and ended with one of the biggest financial rescues in history.

The conference call at 1130 GMT, which was convened on Sunday, followed intense telephoning between senior officials over recent days and a preparatory call by deputies to the ministers and central bank governors, a G7 source told Reuters.

The statement said ministers welcomed the "extraordinary actions" taken by Washington to remove illiquid assets that have contaminated banks' balance sheets and fueled a financial crisis widely seen as the worst since the 1930s.

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