Their statement may not be enough to allay the sense of panic that has swept through global markets in recent weeks after Lehman Brothers collapsed into bankruptcy, triggering a wave of risk aversion that left banks hoarding cash.
“The markets wanted maybe more assurance that there would be a unified global backstopping of the banks, and it doesn’t sound like that’s in there,” said Kim Rupert, managing director of global fixed-income analysis at Action Economics.
On Wall Street, the Dow Jones Industrial Average plummeted nearly 700 points in the opening minutes of trading but made up much of that loss in the last hour of the session. The Dow shed 1,874.19 points for the week, or 18 percent, to close at 8,451.19 - the biggest weekly slide in the history of the 30-stock index. Stock markets in Europe and Asia also took a plunge.
But Treasury Secretary Henry M. Paulson Jr. who, along with Federal Reserve Chairman Ben S. Bernanke, represented the United States at the meeting, said the five-point plan was a bold step that shows the governments of the world’s top economies are serious about dealing with the global market crisis.
“What came out of that meeting was there weren’t differences in what we needed to do,” Mr. Paulson told a gathering of reporters Friday evening. “These action plans were what we all needed to do.”
Mr. Paulson said it was unrealistic to expect the countries to adopt a singular plan to address credit problems in their individual countries.
“Some in the press and some in the markets are naive if they think that different countries with different financial systems, economies in different stages of development … are going to come up with precisely the same policy to deal with the issues,” he said.
Missing from the plan was a British proposal to guarantee loans between banks. British officials have pushed the G-7 to address the root causes of the seizure of the global banking system by recapitalizing institutions and enacting other measures to stimulate interbank lending.
• Click here to view the communique issued Friday by the G7.
Britain this week offered about $87 billion of capital injections to at least eight banks in exchange for equity stakes.
“We need to show that we are able not just to talk about these issues but to step up to the mark and do something about them,” British Chancellor of the Exchequer Alistair Darling told Bloomberg Television. “It is absolutely essential that the world’s largest economies act together, and they act together now.”
The Treasury Department has a $700 billion rescue plan in hand, which it could tap to buy stakes in banks. European leaders have yet to unite behind a similar proposal.
Friday’s meeting was a prelude to scheduled talks Saturday with President Bush, the managing director of the International Monetary Fund and the president of the World Bank. Officials from the Group of 20 nations are expected to meet in Paris this weekend as part of a summit of European leaders.
This article is based in part on wire service reports.