Clinton and top bankers seek way to restore calm

President Clinton has called on all countries to work for new ways to increase economic growth and not leave it to just the richer nations. "This is a task not just for the G7 alone. This is an issue that affects every nation in the world."

The President was addressing the finance ministers and central bank heads from 22 industrialised and developing countries who were meeting to discuss ways of tackling the financial crisis affecting much of the global economy. The President had proposed such a meeting several months ago as financial turmoil was affecting stock markets worldwide. The meeting organised by the US Treasury is coinciding with the annual Autumn meeting of the International Monetary Fund and the World Bank. The formal IMF/World Bank meetings open today in Washington and will also be addressed by Mr Clinton. Ireland will be represented by the Minister for Finance, Mr McCreevy and the Governor of the Central Bank, Mr Maurice O'Connell.

Calling for the new ways to contain the financial crisis, Mr Clinton said that a more modern "architecture" for the world's financial markets would solidify support for capitalism and democracy. If a new system is not designed and built, then both may be in jeopardy in nations around the world. On Wall Street, there was an initial plunge in stock prices and then a partial recovery following the release of the annual report of the IMF policy-making committee which said that "the outlook for the world economy has worsened considerably" since April.

"The downside risks to the current outlook have increased significantly," according to the report. But it also noted that "there is continuing, generally solid, growth in the industrial countries of North America and Western Europe."

Earlier yesterday the World Bank development committee also discussed the problems affecting poorer countries arising from the Asian crisis which erupted last year. Meanwhile, the New York Times has reported that senior Japanese financial officials have told their American counterparts that Japan's banks are facing bigger capital shortfalls than have previously been admitted.

President Clinton is urging IMF/World Bank member states to accept the US plan to tackle the global economic crisis. The plan includes a new IMF contingency fund to help countries threatened by panic moves by investors although their economies are fundamentally sound.

The plan also calls for expanded World Bank loans for bank restructuring in poorer countries; loan guarantees to stimulate renewed capital flows to emerging markets; export credits for US exporters to Latin America.