June 10, 2008 Prepared Statement by Treasury Under Secretary David H. McCormick Washington − Good afternoon. The G-8 Finance Ministers will be hosted by As typically happens, the Ministers will discuss the global economy, focusing on the near-term prospects for their economies and taking note of the continued strong performance in many emerging markets. Both Oil market developments and high global food prices will factor into the global economy discussions. The vast majority of the run-up in oil prices reflects long-term trends in fundamentals: global economic growth has been consistently strong since 2002 and especially fast among emerging market economies. This strong growth has driven demand for oil while growth of global oil production has been basically flat since 2005. Ministers will likely focus on medium to long-term policies that can affect demand and supply, including developing alternative fuel sources. On high food prices, the talks are likely to focus on progress to date in meeting emergency humanitarian assistance needs, efforts to ensure that farmers in developing countries have access to yield-enhancing inputs for the next harvest including seeds, pesticides and fertilizers, and plans to improve agricultural productivity in developing countries in the coming years. The Secretary Paulson will tell his G-8 colleagues that the housing correction, financial market turmoil, and high energy prices continue to weigh on the The Administration has also led several initiatives to help ease the strain from the housing downturn. We are seeing results. The HOPE NOW alliance reports that since last July, the mortgage industry has helped nearly 1.46 million homeowners stay in their homes. Despite the recent turmoil, I share Secretary Paulson's confidence in the resiliency and flexibility of the In addition to policy actions to strengthen the economy in the near term, it is essential to enhance the functioning and stability of the In April the G-7 Finance Ministers and Central Bank Governors endorsed a series of FSF recommendations that complement efforts underway in the FSF Chairman Mario Draghi will provide an update on the implementation of the FSF recommendations to G-8 Finance Ministers in Saturday's meeting. We are encouraged by the progress so far to meet these goals, as well as progress implementing the other FSF recommendations. Financial institutions have raised almost $270 billion in new capital since the turmoil began, and will shortly begin making their first half reports, which we expect to comply with leading practices. The Basel Committee on Banking Supervision is on track to issue liquidity guidelines for public comment in July, and IOSCO issued its Code of Conduct for Credit Rating Agencies in May. We look forward to another progress report by the FSF at the G-7 Ministerial meeting in October. Climate change, an issue of great concern to Secretary Paulson, will be a major subject of discussion during the meeting. Last year, President Bush initiated the Major Economies process to bring the major emitting developed and developing countries together to tackle climate issues and tasked Secretary Paulson with creating an international program to promote clean technology deployment in developing countries. At this meeting, Ministers will review the considerable progress made in establishing the Clean Technology Fund. The Fund is a critical new multilateral effort of the G-8 countries to reduce the rapid growth of greenhouse gas emissions in developing countries by helping them to finance the additional costs of deploying clean energy technologies over cheaper, dirtier alternatives. Late last month we had a successful meeting in Development -- with a particular focus on Africa -- is a key theme of Thank you for coming, and I look forward to answering your questions. -30-
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