Group of Seven Pledges Support for Strengthened Financial Sector Surveillance

• Pages: 360-362

Page 360

The financial problems that began in Asia last year have exposed weaknesses in emerging market countries and in the international financial system.

At our meeting in Washington on October 3, we, the Finance Ministers and Central Bank Governors of the Group of Seven countries, agreed on the importance of intensified cooperation among us in meeting the challenges of the current situation and on the need to work together quickly on a wide range of reforms to strengthen the international financial system. Today, our leaders announced agreement on a number of follow-up steps to this end that we will be implementing as rapidly as possible.

Meeting the Challenges of the Current Situation

We welcome the positive developments since our meeting on October 3. As we said following that meeting, we reaffirm our commitment to create or sustain the conditions for strong, domestic demand-led growth and financial stability in each of our economies. The authorities will continue to be vigilant in the light of the shift in the balance of risks on a global basis. There has also been important progress in a number of other areas:

- We welcome the positive steps that have been taken toward the implementation of the IMF quota increase and the New Arrangements to Borrow. We call for these to be implemented as soon as possible. Together, they will provide additional resources of $90 billion for the

IMF, which should be used to ensure the stability of the international financial system.

- In consultation with our partners, we further commit ourselves to supplement the IMF's resources where necessary through the activation of the New Arrangements to Borrow and the General Arrangements to Borrow.

- In response to the current exceptional circumstances in the international capital markets, we are agreed that strengthened arrangements for dealing with contagion are needed. The central element would be the establishment of an enhanced IMF facility that would provide a contingent short-term line of credit for countries pursuing strong IMF-approved policies. This facility could be drawn upon in times of need and would entail appropriate interest rates along with shorter maturities. The facility would be accompanied by appropriate private sector...