October 15, 2011- The financial heads of the 20 largest economies in the world will pledge their collective help in making sure banks are capitalized adequately and have access to needed funding. This amidst worries in the global markets of the need for capital in euro zone banks, which is threatening to place a liquidity squeeze on the region.
In the meetings of the world’s financial leaders, they assured their central banks would be ready to provide funding as needed. The leaders also worked on an action plan aimed at boosting growth across the globe helping to pull the economies around the world out of the doldrums.
The meeting in Paris comes at a time when the debt crisis in Europe threatens to put to a standstill any small global recovery and create what some say could be a financial meltdown worldwide. Emerging economies have aided in pulling the advanced economies along since the 2008 financial crisis because of their large expansions nevertheless, they too risk plunging demands from trade partners and major reversal of investments.
The International Monetary Fund has for some time urged authorities in the euro zone to increase their capital requirements in the weaker banks within the region. Leaders initially did not accept the IMFs warning calls but since the Dexia SA bank failure, officials have acknowledged there is a need for additional capital requirements. However, the leaders disagree with the IMF on what are the adequate levels needed and how the recapitalized process should be handled.