FROM THE OFFICE OF PUBLIC AFFAIRS

This weekend I will be meeting in London with other finance ministers in the G-7. Today, I'd like to give a brief overview of our agenda.

This meeting occurs at a critical time in the global economy. In recent months financial instability in Asia has shaken the region and affected economies around the world, including our own, and the economic and national security interests of the United States have been brought sharply into focus. By helping these countries where disruptions have occurred reestablish financial stability, we help them to become once again strong markets for American goods, have stronger currencies that will help the competitiveness of our goods in world markets, and reduce the risk that financial in stability will spread to other developing countries --the recipients of over forty percent of our exports. In addition, we help to protect our national security interests in a stable and peaceful Asia.

As we respond to the situation in Asia, it is important to remember that the international financial markets and global economy offer tremendous benefits to American workers, farmers and businesses through greater exports, more high-paying jobs, higher standards of living, and lower inflation. But with the opportunities have come risks. Making the most of those opportunities, while managing the risks, are high priorities of this Administration --and a key focus of the G-7.

The situation in Asia will dominate the meetings this weekend, first in our discussions of steps the G-7 can take to improve the prospects of resolving the situation; and more generally as the backdrop for our ongoing efforts to improve the international financial architecture to prevent future crises or manage them if they occur. Let me discuss each of these for a moment.

First, we will review the overall state of the world economy, the impact of the disruption, and the challenges we face in promoting global growth. Although the key to recovery lies with the Asian nations, strong growth in the G-7 is also necessary for a successful resolution.

In this context, Japan, the second largest economy in the world, has an especially crucial role. If Japan were on a strong economic track led by domestic demand led growth, it would be a larger market for Asian goods, a source of greater bank credit and other capital flows, and a wellspring of confidence for the region. I look forward to my first meeting with Minister Matsunaga.

Second, we will discuss the progress the Asian economies have made in following through on their commitments to reform their economies. Let me emphasize that the reform programs are the key to restoring financial stability. Only when sound policies are pursued, will confidence, capital and growth return to these nations.

Third, we will discuss our proposal for the Trade Finance Initiative, a multilateral effort to provide necessary short term trade credits to struggling Asian economies. This initiative can make a strong contribution to the return of economic growth in the region.

Finally, I will discuss our Administration's efforts to receive the funding necessary to enable the IMF to respond effectively if the current crisis were to spread --which we all want to avoid --and to future crises. Here in the United States, it is critically important that the Congress approve the Administration's request for the U.S. contribution to the IMF and for the New Arrangement to Borrow. And let me once again stress that when the IMF draws on our commitments, we receive a liquid, interest bearing offsetting claim on the IMF of equal value. In fifty years, the IMF has never cost taxpayers one dime.

Even as we address today's financial instability in Asia, the G-7 will also focus on efforts to reform the international financial architecture to better prevent crises and manage them when they occur. We here in the United States have been focused on this issue for some time now --Deputy Secretary Summers held a meeting on the topic this week --and it will be a major focus of our discussions this weekend.

Our effort will center on six elements: promoting more efficient global markets; increasing disclosure and transparency; strengthening financial systems, both globally and in individual economies; improving domestic policy management; rethinking the role of the international community in financial crises; and encouraging appropriate burden-sharing by the private sector, especially with respect to the so-called moral hazard problem, so that investors and creditors bear the full consequences of their decisions.

None of these challenges is simple. They have taken decades to develop and none will be solved overnight. But at our meeting this weekend, we will take another step to help set the stage for advancing this effort at the G-7 Summit in May.

To conclude, let me say that by acting to restore financial stability in Asia, and by strengthening the international financial architecture to deal with new risks in financial markets and the world economy we help strengthen our own economy now, and improve our prospects for growth in the future. I'd be happy to answer your questions.