Finance ministers and central bank heads of the world's seven leading industrial nations were coming together Friday to discuss a way out of the turmoil in financial markets and a wider economic downturn, according to dpa. The G7 ministers hope to coordinate new government powers to boost transparency in investment banks, which have suffered more than 200 billion dollars in write-offs from the fallout of the home mortgage crisis in the United States. German Finance Minister Peer Steinbrueck said the crisis had shown the financial sector could not be left to regulate itself and that stronger government regulation was needed. Speaking to reporters before the G7 meeting, Steinbrueck said it was time to change the "rules of the game" rather than just allow a market correction to play out. It was up to governments to make sure their was "no repetition of this financial market crisis." The meeting comes on the sidelines of the International Monetary Fund and World Bank's traditional spring meetings this weekend. US officials said they would also press their counterparts on reforms to boost the legitimacy of the two global lending institutions. The IMF this week warned that banks could lose nearly 1 trillion dollars as the value of mortgage-backed securities has plummeted since mid-2007, prompting a crisis of confidence in lending and the wider financial system. The US Federal Reserve has taken a series of unprecedented steps along with other central banks to boost liquidity in the market and bail out struggling investment banks. US officials will urge other agencies and governments to speed up their own investigations into how to improve supervision of the financial industry, after the Treasury Department last month laid out its own plans for a complete overhaul of regulatory practices. Steinbrueck said he was confident the world's top industrial nations would agree to concrete measures to help restore confidence in the markets. He welcomed the findings of the Financial Stability Forum (FSF), a global body that has been tasked with developing plans to combat the financial crisis. The G7 ministers will be briefed by the FSF's head Mario Draghi during the afternoon meeting. The group's report outlines improved standards for liquidity and risk management as well as greater transparency among credit rating agencies. Treasury Under Secretary David McCormick on Wednesday said it was "critical" for the G7 to work together to bring stability back to the markets and deal with a slowdown of the global economy. The IMF this week forecast that global growth would slow to 3.7 per cent in 2008 from 4.9 per cent in 2007, on the back of a predicted mild recession in the United States. McCormick called the IMF's projections "unduly pessimistic." Treasury Secretary Henry Paulson will host his counterparts at the department's headquarters before a dinner that will also bring together private sector players from financial institutions.
