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G-20 pledges to revive global economy

Finance officials from rich and developing countries pledged Saturday to do "whatever is necessary" to fix the global economy, including supervision of freewheeling hedge funds and restoring bank lending.
Image: G-20 conference
G-20 finance ministers meeting in Horsham, England, on Saturday said they'll do whatever is necesary to get the world economy back on track.Sang Tan / AP
/ Source: The Associated Press

Finance officials from rich and developing countries pledged Saturday to do "whatever is necessary" to fix the global economy, including supervision of freewheeling hedge funds and restoring bank lending by dealing with the shaky securities clogging their finances.

But officials remained cool to a U.S. push for more coordinated government spending to stimulate economies.

They called instead on the International Monetary Fund to assess the individual government actions already taken and what more might be required, rather than laying out definite plans to ramp up spending.

Finance ministers and central bankers from the Group of 20, which accounts for more than 80 percent of the world economy, agreed there was an "urgent need" for a big boost to the lending resources of the International Monetary Fund to help struggling governments in the developing world.

They left the specific amount and who would contribute open, to be taken up at the much-anticipated summit of the group's national leaders in London on April 2. The job of Saturday's meeting was to shape the agenda for that gathering, which will be closely watched for whether leaders can find common steps to take.

"We're prepared to take whatever action is necessary to ensure growth is restored and we're committed to do that for however long it takes to do that," said British Treasury chief Alistair Darling.

U.S. Treasury Secretary Timothy Geithner, who had pushed for Europe to match Washington's $787 billion package of spending and tax cuts, said there was "broad consensus globally on the need to act aggressively to restore growth to the global economy."

Geithner said he was pleased with progress made at the talks on Friday and Saturday, but noted that the crisis was still playing out. "This is a very challenging period and this is still evolving," he told reporters.

Restoring confidence
Darling said that it was for "individual countries to decide what's right for them."

"They've got to reach a judgement as to how much they do, what effect is it having, which areas of the economy they need to support, whatever's right for them," he said.

Germany, which has been the most outspoken critic of the U.S. push for more spending, said that fixing the financial system has to come first.

"It makes no sense to pump more and more money in our economy when we haven't restored the confidence on the financial market," said German Finance Minister Peer Steinbrueck.

Officials instead put the focus on restoring frozen bank lending through cash infusions and dealing with the shaky assets souring bank's balance sheets. The U.S. is working on a plan to do that with public and private money, but details have not yet been announced.

The G-20 statement also agreed to some oversight on hedge funds, largely unregulated investment funds whose financial clout has grown enormously over the past decade. 

The finance ministers said they agreed to make sure that "all systematically important financial institutions, markets and instruments are subject to an appropriate degree of regulation and oversight and that hedge funds or their managers are registered and disclose appropriate information to assess the risks they pose."

They also agreed to oversight and registration of credit rating agencies, clearer accounting rules for problem assets, and more standards for credit derivatives, another lightly regulated area that has raised fears of large losses.

Concrete action urged
Steinbrueck said it was now crucial to turn these promises into concrete action so that "every financial market ... should be supervised, regulated or overseen and that includes pools of capital like hedge funds or private equity funds."

The group also committed to fighting protectionism and pledged to help emerging and developing economies to cope with the loss of international capital flows, an issue that they have raised repeatedly.

The four major emerging economies at the meeting — Brazil, Russia, India and China — had earlier released their own joint communique, calling for a bigger role in the International Monetary Fund. The final summit statement agreed that IMF governance needs to reflect the changed global economy and the growing role of developing countries.