Finance chiefs from rich nations meet on Friday to bless proposals for tightening scrutiny of global banking practices and to press the private sector to step up its efforts to settle financial markets.
Group of Seven finance ministers and central bankers will review a hefty set of recommendations from a blue-ribbon study group, the Financial Stability Forum, for calming a markets crisis that has rippled across the globe since last summer and may eventually cost as much as $1 trillion (506.5 billion pounds) in losses.
Indications before Friday's meeting were that most G7 members already accept the proposals, including measures to improve risk management so banks aren't caught short of cash as occurred this year when credit markets seized up.
"I expect the recommendations of the FSF, perhaps amended somewhat, will be adopted by the ministers and central bankers," Canadian Finance Minister Jim Flaherty said on Wednesday as he briefed reporters ahead of the G7 meeting.
The next step will be to push bankers to match the vigour of the efforts that global central banks have shown in battling the liquidity squeeze by urging these private-sector players to quickly put their losses behind them and resume lending.
BANQUET FOR BANKERS
A select group of bankers has been invited to a dinner on Friday night at the U.S. Treasury Department, following the formal G7 meeting and after a G7 communique has been issued at around 6:30 p.m. (11:30 p.m. British time).
The G7 comprises the United States, Britain, Canada, France, Germany, Italy and Japan. U.S. Treasury Secretary Henry Paulson clearly stated his position on Thursday that he wants banks to be ready to play their role as a market stabilizer.
"If you think you're going to need capital, don't be looking for the government to help you," Paulson said after addressing the Council of Institutional Investors. "If you think you need capital, go raise it."
On the eve of Friday's gathering, Bank of Japan Governor Masaaki Shirakawa said the G7 countries "need to show a clear determination towards stabilizing the financial system."
