A joint statement today from G-7 Finance Ministers and Central Bank Governors following their meeting notes that the recent financial market turbulence, high oil prices, and weakness in the US housing sector will likely moderate the fifth year of robust global economic growth – but that the overall economic fundamentals continue to be strong. Emerging markets, they say, provide critical impetus to the strength of the world economy.

To ensure a sound, transparent, and comprehensive framework, the G-7 has asked the Financial Stability Forum (FSF) to analyze the underlying causes of the recent market turbulence and offer proposals in the areas of liquidity and risk management; accounting and valuation of financial derivatives; role, methodologies and use of credit rating agencies in structured finance; and basic supervisory principles of prudential oversight, including the treatment of off-balance sheet vehicles.

Noting that cross-border, market-based investment is a major contributor to robust global growth, the G-7 agreed that Sovereign Wealth Funds (SWFs) are increasingly important participants in the international financial system. *”We see merit in identifying best practices for SWFs in such areas as institutional structure, risk management, transparency and accountability.”*

In addition to economic growth, to which the group remains committed, other matters discussed included the progress made in implementing the FSF recommendations on Highly Leveraged Institutions. *”In this context, we welcome the work undertaken by private sector representatives in the United Kingdom and the United States to develop strengthened best practices.”* the concluding statement said.

Also discussed was World Bank and IMF reform. The former included a report from World Bank President Zoellick on a plan for ensuring the Bank successfully meets its evolving challenges in promoting economic growth and poverty; and the latter the decision to modernize the Fund’s framework for surveillance.


The G7 affirmed its commitment to fighting money laundering, terrorist financing and other illicit financing involving similar risks to financial markets. It commended the Financial Action Task Force (FATF) for its ongoing work and deepening its dialogue with the private sector, and it called upon the IMF and World Bank to continue their close cooperation with the FATF. *” We urge the FATF to collaborate intensively with jurisdictions that have failed to recognize international standards. We look forward to meeting with other FATF Ministers next Spring to refresh the mandate of the FATF.”*

The FATF was commended, too, for taking steps to protect the international financial system from the various money laundering and terrorist financing risks related to Iran.