G20 vows 'strong' response to economic crisis

WASHINGTON: The Group of 20 major economies pledged late Thursday to mount a powerful response to the rising challenges facing the world economy as it reels from a debt crisis in the eurozone.

The G20 finance ministers and central bankers vowed in an unexpected joint statement to deliver "a strong and coordinated international response to address the renewed challenges facing the global economy."

The finance chiefs noted "heightened downside risks from sovereign stresses, financial system fragility, market turbulence, weak economic growth and unacceptably high unemployment."

The G20 officials, grouping advanced and emerging-market economies, said they would work together to support growth and implement "credible fiscal consolidation plans."

"This will require a collective and bold action plan, with everyone doing their part," they said, hours after stocks plunged worldwide.

The officials said the action plan would be prepared for the G20 leaders summit on November 3-4 in Cannes, France.

The G20 finance chiefs had not been expected to issue a statement following their working dinner in Washington on the sidelines of the International Monetary Fund and World Bank annual meetings.

The group is scheduled for meetings Friday, followed by a news conference.

But the surprise declaration came after a huge selloff in financial and commodity markets, sparked both by Europe's public debt problems and perceptions that the US economy is falling back toward recession.

At a post-dinner news conference, French Finance Minister Francois Baroin, whose country holds the G20 presidency, said that a statement had not been planned.

But he said "the importance of the situation and the shared desire to make a collective response" led the officials to make it, as well as "the turbulence we see on the markets."

In the statement, the G20 pledged to "take all necessary actions" to preserve the stability of banking systems and financial markets "as required."

"We will ensure that banks are adequately capitalized and have sufficient access to funding to deal with current risks and that they fully implement Basel III along the agreed timelines," the statement said.

Central banks will continue to stand ready to provide liquidity to banks as needed, and monetary policies will maintain price stability and continue to support economic recovery, it said.

"We are taking strong actions to maintain financial stability, restore confidence and support growth."

Copyright AFP (Agence France-Presse), 2011