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Asia, Europe close ranks at ASEM summit to ease financial crisis

Asia, Europe close ranks at ASEM summit to ease financial crisis

Asian and European leaders closed ranks yesterday to try to bolster confidence among investors who fear that a global credit crunch has ushered in a deep and damaging world recession.
The worst financial crisis in 80 years has forced countries to work together to find ways to help shore up a financial system crippled by banks fearful of lending to each other.
But with evidence mounting that Europe is already in recession, analysts fear that cooperation in shoring up banking systems could be threatened as governments begin to turn their attention to reviving domestic demand.
"We must use every means to prevent the financial crisis impacting growth of the real economy," Chinese Premier Wen Jiabao (溫家寶) said at the end of a two-day summit of 43 Asian and European leaders in Beijing.
Governments have pledged around US$4 trillion to support banks and restart money markets to try to stem the crisis and have looked into introducing tougher financial rules to guard against any repeat.
Wen said countries needed to strike a balance between innovation and regulation and between savings and consumption.
"We need financial innovation, but we need financial oversight even more," he said, adding that China's priority was to spur domestic demand to ensure the country maintained fairly fast, steady growth.
In the Gulf, finance ministers and central bank governors said at a meeting on coordinating policy that they would look at directing more government funds into banks and regional stock markets, Al-Arabiya television reported.
Saudi Arabia, the United Arab Emirates and four other Gulf states have so far adopted separate responses to ease the pressures of the liquidity crunch on their banking sectors.
According to the meeting's agenda, they would also discuss growing concern that foreign investment from countries hit by the crisis could be "liquidated," and reassess their foreign investment policies.
Any significant redirection of Gulf investment to domestic markets could be a concern for banks and other firms in the West which have eyed the huge sums in the region's state-run sovereign wealth funds as a potential source of capital while European and U.S. credit and share markets are seized up.


Updated : 2020-12-03 16:47 GMT+08:00