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World leaders gather for G7 in Washington

World leaders gather for G7 in Washington
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With the financial system in shambles, leaders of the world’s top economies are in Washington looking for answers. Finance ministers and central bankers from the Group of Seven countries are meeting this weekend. Their task is to find some way to stop panic selling in the stock markets and to unfreeze credit facilities.

The past month saw major losses on most stock markets around the world.

Wall Street is down around 30 per cent; Brazil has lost 35 per cent; South Africa dropped around 27 per cent; Russia plunged 46 percent; India descended by 25 per cent and Japan has lost a third of its value.

One financial analyst believes a unified response is required.

‘‘A global security blanket. That’s what investors need. It’s what policymakers keep talking about, but as yet there has been no single global policy response. Lots of ad hoc, lots of individual measures, but really it’s a single, unified self-reinforcing response that investors are looking for. There’s an opportunity this weekend, for sure, with the G7 and the IMF meetings; probably the most important meetings we’ve had in at least a decade, probably four decades since the institution was created.’‘

The International Monetary Fund has declared it is ready to lend to countries in crisis. The IMF has activated an emergency financing mechanism first used in the 1990’s Asian financial crisis.

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