The International Monetary Fund is backing a plan by Canada and the other G7 countries to fight the worldwide credit crisis, which continues to play havoc with the world's major financial sectors.
Officials with the lending institution spent the day in Washington and met with various Group of Seven finance ministers.
The G7 countries have not described any specific plan, but have promised to work together and focus on the following key promises:
- Prevent the failure of major banks
- Get credit markets flowing
- Reinforce deposit insurance programs
- Fix the mortgage financing system
- Help countries with growing economies also affected by the crisis
Canada's Finance Minister Jim Flaherty emerged from an early morning discussion with U.S. President George Bush and G7 officials, telling reporters the mood at the White House meeting was one of "uncertainty."
But Flaherty noted that even though the banking crisis is "severe and protracted and continuing," Canada's economy is expected to show some growth next year.
"We are on the positive side and it's anticipated by the IMF (International Monetary Fund) that we'll have the best economic growth in the G7 next year, albeit small economic growth -- 1.2 per cent," said Flaherty.
He told Â鶹´«Ã½net after the morning meeting that Canada's banking system is well-regulated and the country's banks are well-capitalized. They don't face the same type of problems confronting some U.S. banks, he said by phone from Washington.
Flaherty was also expected to meet with the so-called G20 countries on Saturday, which includes India and China.
"I'm worried about the freezing of credit around the world. It is something that is not only happening in the G7 countries but is extending into emerging economies," he said.
"It's important that we get out of this credit crisis internationally."
Flaherty said only then will global economies be able to minimize the impact of the crisis on sectors such as the auto industry.
Bush calls for global cooperation
At the White House earlier, U.S. President George Bush called for the world's governments to work together to deal with the current credit crisis.
He said world leaders are "working towards the same goals" to resolve banking-sector problems that have hit the U.S. and Europe.
The credit crisis has shocked international stock markets, which took major losses this past week. Bush invited the G7 finance ministers to the White House in the latest step to stop further economic decline. Bush said the global community must resolve the crisis through a coordinated plan.
"We must make sure one country's actions don't contradict those of others," Bush said.
"The world's economy will emerge stronger as a result."
He also said the U.S. would lead the way in finding a solution to what is being described as the worst financial-sector crisis since the Great Depression.
"The United States has a special role to play in leading the response to this crisis ... That is why I convened this morning's meeting here at the White House and it is why our government will continue using all the tools at our disposal to resolve this crisis," Bush said.
Harmonized rate cuts
Economic analyst Theo Caldwell told Â鶹´«Ã½net after Bush's press conference that the early morning meeting sent a strong message about the need for global cooperation.
"One of the things (that's needed) ... is a harmonized series of rate cuts by central banks to free up credit markets, short-term and long-term credit," he said.
"This has gone beyond being a market problem to being a credit problem."
U.S. Treasury Secretary Henry Paulson also announced Friday evening that the U.S. will buy an ownership stake in a number of American banks -- for the first time since the Great Depression.
"This is a period like none of us has ever seen before," Paulson said.
With files from The Associated Press
