G20 ready to act together to stabilise markets

Members of the Group of 20 leading industrialised and developing nations said Monday they are ready to act together to stabilise financial markets and protect growth. The joint statement was released by South Korea after further sharp falls on Asian bourses following the unprecedented US credit rating downgrade by Standard and Poors. Monday's falls followed a huge sell-off Friday caused by mounting problems in the eurozone, amid growing expectations that Italy and Spain could need a bailout. The G20 finance ministers and central bank governors affirmed a commitment to "take all necessary initiatives in a coordinated way to support financial stability and to foster stronger economic growth in a spirit of cooperation and confidence". They said they would stay in close contact in coming weeks "and cooperate as appropriate, ready to take action to ensure financial stability and liquidity in financial markets". The Group of 7 largest economies vowed earlier Monday to bolster stability and the European Central Bank pledged to "actively" buy eurozone bonds. "We are committed to taking coordinated action where needed, to ensuring liquidity, and to supporting financial market functioning, financial stability and economic growth," the G7 statement said. South Korea chaired the G20 last year before handing over to France. Deputy Finance Minister Choi Jong-Ku told reporters it was premature to talk about concrete, coordinated actions that may be taken by the group. "All market movements need to be monitored very closely at this time," he said. Choi said G20 members agreed that the eurozone's latest measures to contain the sovereign debt crisis must be implemented with all speed, while the US told other members that Standard & Poor's initial rationale for the downgrade was based on a miscalculation by the agency. He said Washington relayed assurances from the other global ratings agencies Moody's and Fitch that they have no plan for a similar downgrade. Choi said South Korea's confidence in US Treasuries remains firm and it has no plans to change its foreign-exchange reserves policy.