BRUSSELS/WASHINGTON - G-20 COUNTRIES agree it is too soon to begin withdrawing measures to end the global economic crisis and at talks in London this week will discuss coordinated actions to wind down trillions of dollars support and push forward financial reforms.
The United States will propose an outline for tougher global bank capital standards at the meeting of finance ministers, starting a process to eventually supplant the Basel II standards with a broader-based effort.
US Treasury Secretary Timothy Geithner said a stronger capital accord was a critical part to make the financial system more stable by limiting the risk of large institutions failing.
The accord would be developed under the auspices of the Financial Stability Board, Mr Geithner said, an international body that was recently expanded to include major emerging economies such as China, India and Brazil.
European finance ministers meeting in Brussels on Wednesday said the worst of the recession was over in the 16 countries that use the euro currency but ruled out an immediate end to the fiscal and monetary help.
A British government source said there was agreement on this in the Group of 20 developed and developing economies, whose finance ministers meet in London on Friday this week, and 'everyone thinks it is certainly too early to declare victory.'
Mr Geithner agreed, saying that although the global economy has pulled back 'from the edge of abyss' in the past year and was showing early signs of resuming growth, it was too early to let up on stimulative efforts.
The G-20 ministers are also expected to discuss a US push for agreement on giving emerging market countries more voting power in the International Monetary Fund. A G-20 source said Washington wanted at the very least a statement to be made on the issue when G-20 leaders meet in Pittsburgh on Sept 24-25.
The ministers and central bankers will assess in London how far the world economy and banking system is recovering from two years of crisis.
'The worst is over for the time being,' Jean-Claude Juncker, the chairman of euro zone finance ministers, said after new data confirmed only a 0.1 percent fall quarter-on-quarter in euro zone gross domestic product in the April-June period.
He said the time had 'not yet come to withdraw the fiscal stimulus.' But the euro zone ministers agreed they must be ready to withdraw the measures when the time comes and that this should be coordinated globally. -- REUTERS
