Last week's meeting of the International Monetary Fund (IMF) was attended by the world's financial leaders who are putting aside political differences in order to stave off a global recession. Instead of the bickering that usually takes place at IMF meetings, attendees were desperately seeking solutions to the worse financial crisis in recent history. The IMF's steering committee said Saturday that all 185 member nations are committed to do whatever it takes to support the financial system, including a promise to "take decisive action and use all available tools to support systemically important financial institutions and prevent their failure." The IMF statement mirrored commitments made by finance ministers and central bankers from the seven wealthiest industrialized countries. Following the IMF meeting economic leaders from a group of wealthy and developing countries pledged to intensify efforts to unfreeze credit markets. Such cooperation was not expected at the IMF meeting. Last month Treasury Secretary Paulson's pleas for other nations to establish bailout programs similar to the US plan were ignored. European leaders and emerging nations who comprise a majority of IMF members blamed the economic crisis on the US and saw it as an American problem. While many still blame the US, the fall of the Dow and chaotic world markets have given world leaders an incentive to cooperate. During the past year, people in the U.S. have watched $8.4-trillion drain from investment accounts and retirement savings. Canada's Finance Minister Jim Flaherty stated, "This has created some consternation in emerging economies (But) it is important to make sure we are unified in our approach. This is a severe problem. Everybody needs to participate." The real challenge will be for IMF leaders to convince investors that participating nations are willing to back their words with actions. U.S. President George W. Bush met with ministers from the G7 yesterday morning and then made a surprise appearance at the G20 meeting. Mr. Bush promised that his administration is doing everything possible to avert the worse financial crisis in seven decades. A White House spokesman Tony Fratto said that Mr. Bush acknowledged that the crisis began in the US and because of the international nature of the crisis felt it important to attend meetings of the G7 and G20 nations. According to Mr. Fratto, Bush stated, "It doesn't matter if you're a rich country or a poor country, a developed country or a developing country, we're all in this together. We take this seriously, and we want to work with you." In response the G20 nations issued a statement in which leaders pledged cooperation to, "to overcome the financial turmoil and to deepen co-operation to improve the regulation, supervision and the overall functioning of the world's financial markets." The IMF strongly endorsed a five point plan by the G7 nations in which, Canada, the United States, Japan, Germany, France, Britain and Italy jointly pledged to use all means possible to prevent major financial institutions from failing and to keep pumping money into the banking system to unfreeze lending and get credit flowing again. In a Rose Garden appearance, Mr. Bush made a plea for nations work together and reminded nations that protectionist policies had worsened the great depression. In the past the IMF has been hampered by bickering among members most notably between developing nations and wealthy industrialized nations. The severity of the global financial crisis has prompted unprecedented cooperation among IMF members. Since monetary and credit policies have a great effect on Forex markets, especially interbank Forex, it remains to be seen how the recent flurry of government activities around the world will affect Forex exchanges. While Forex markets have so far avoided the volatility of stock markets it remains to be seen just how long that will last.
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