TheSpec.com - BreakingNews - Too soon to end stimulus spending, G7 finance ministers say
Too soon to end stimulus spending, G7 finance ministers say
February 07, 2010
QALUIT, NUNAVUT — The Group of Seven finance ministers issued a warning Saturday that governments should not withdraw economic stimulus too early, or press for overly tough banking reform, for fear it might stall the recovery.
Wrapping up two days of meetings Saturday, the ministers said economic recovery is well underway and started earlier than many had expected, but it is still very fragile.
That calls for some caution in designing regulatory reforms for banks, U.S. Treasury Secretary Tim Geithner said.
“We’re going to design this framework with great care and we’re going to make sure as we put it in place we’re going to do so in ways that don’t undermine prospects for recovery.”
Geithner was especially vocal in cautioning that measures to reform the global financial system and banking reform should not be too stringent.
Britain has placed an onerous tax on banker bonuses and the United States has proposed regulations, including a ban on bankers using their own assets to trade, that others see as unnecessary.
On Friday, G7 chairman Jim Flaherty said it was important to achieve some uniformity in banking regulations, noting that some proposals “are not entirely consistent.”
Several officials say that uniformity may be unattainable, and may not be essential as long as reforms are compatible.
But without an official communique outlining areas of agreement it will be difficult to gauge where the yardstick is on banking reform leading into the larger G20 meetings in June.
The G7 finance ministers have agreed they should continue to hold meetings, despite being overshadowed by the Group of 20, with talks set for the sidelines of the G20 summit this spring.
The ministers and central bankers also held talks on the mounting debt problems in some European countries, particularly Greece and Portugal.
And Flaherty said he would try to convince his colleagues to forgive earthquake-ravaged Haiti’s debt, as Canada has done.