While G20 nations were unified in announcing $1 trillion in new financing to help the world’s economy recover, their approach to dealing with toxic assets clogging bank balance sheets will be a local effort as conditions vary by country.
In a joint statement, the Group of Twenty said Thursday that they will restore lending and repair the financial sector, including the issue the problem of toxic assets, using principles agreed to two weeks ago during a finance ministers conference.
The nations “have provided” support to their banking systems to “address decisively the problem of impaired assets,” pointing to a “framework” issued on March 14 which said its key priority would be to address the issue of uncertain values of assets held on banks’ balance sheets.
While there will be international cooperation to address toxic assets, which assets will be eligible for support should be kept flexible “due to the difference in balance sheet compositions, the conditions in different countries and because the amount and type of impaired assets is likely to differ across financial sectors.”
The principles acknowledge the interconnectedness of the global financial system but said programs to address the impaired assets should “be appropriate to the characteristics of the banking, legislative and fiscal frameworks.”