Last updated: June 5, 2012 4:13 pm

G7 holds emergency eurozone talks

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Finance ministers and central bank governors from the Group of Seven leading industrial nations held a conference call on Tuesday to discuss the financial crisis in the eurozone, and its implications for the global economy.

The US Treasury, which hosted the call as the current president of the G7, said the officials “reviewed developments in the global economy and financial markets and the policy response under consideration, including the progress towards financial and fiscal union in Europe”.

“They agreed to monitor developments closely ahead of the G20 summit in Los Cabos,” it continued, referring to a meeting on June 18 and 19 in Mexico.

A European diplomat said the conference call was a general debate that included the financing needs of Spanish banks and Greece’s June 17 general election.

A senior European official briefed on the call said a potential Greek exit from the euro was not discussed. “We discussed common challenges in the world economy and especially solutions to them,” the official said.

Amadeu Altafaj, the European Commission’s economic spokesman, said the call would be one of a series of such contacts to “inform our international partners of the state of play of our crisis response”.

Mr Altafaj said the commission would participate on the call to lay out the EU’s response to continuing fiscal problems, banking instability and how to return the region to economic growth.

An Italian government official said the discussion would also include a follow-up to contacts between Barack Obama, US president, Angela Merkel, German chancellor, François Hollande, French president, and Mario Monti, the Italian prime minister. The four leaders had an unscheduled three-hour meeting after dinner at last month’s Camp David summit and a conference call more recently.

Although there was no official announcement of the call, it was disclosed by Jim Flaherty, Canada’s finance minister, in Toronto.

“The real concern right now is Europe of course,” Mr Flaherty told reporters, according to Reuters news agency. He said the issues were “the weakness of some banks in Europe, the fact they are undercapitalised, the fact the other European countries in the eurozone have not taken sufficient action yet to address those issues of undercapitalisation of banks and building an adequate firewall”.

In Germany, an official said it was up to the US – as G7 chairman – to make any formal announcement. Government sources cautioned against exaggerating the importance of such a call, however, saying that it was normal for the G7 ministers to consult each other in the run-up to a G20 summit.

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The request for the call had been made in “very general terms”, according to one official, saying that the non-eurozone ministers “want to know what is going on”.

The principal concern in the eurozone is about how to finance the recapitalisation of Spain’s weaker banks, including Bankia, the nationalised lender that has said it needs an additional €19bn to compensate for bad property loans.

The German government insisted on Monday that “all the instruments are available to guarantee the safety of banks in the eurozone”. A spokesman added that it was up to Spain to request assistance from the European Financial Stability Facility – the €440bn eurozone rescue fund – but that Madrid had hitherto insisted it did not need support.

In a separate interview with Handelsblatt, a German business newspaper, Wolfgang Schäuble, German finance minister, said that Spain was “taking the right decisions, although in a crisis of this scale there are no patent recipes”.

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