The Group of 20, made up of the world’s major economies, said they would take all measures required to calm the global financial system and made a pledge to cooperate in order to prevent a worsening of the euro zone’s debt crisis. They said they will bolster the region’s EFSF rescue fund to avoid the crisis from hurting banks and financial markets.
“We commit to take all necessary actions to preserve the stability of banking systems and financial markets as required,” the G20 group said in a communique after a dinner meeting on Thursday.
The pledge of action from the G2O gave a lift to the euro in early trade in Asian markets on Friday, while softening stock losses in Asia. This was a much needed relief after markets were rattled in recent days as investors were concerned about the euro zone debt crisis and overall global growth slowdown and recession, especially after a not so positive US Federal Reserve statement on Wednesday.
The G20 statement said the bloc’s members would implement “actions to increase the flexibility of the EFSF and to maximize its impact” by the group’s next ministerial meeting on October 14, to add to the 440 billion-euro financial rescue fund.
No specific details were given of how the EFSF might be altered, although there is speculation that the fund will be leveraged up since French Finance Minister Francois Baroin used the word “leverage” in his comments to the press.