Back to Headlines Print Version Buzz Up Stumble it Tweet it Facebook LinkedIn

UPDATE:G20: ECB Weber:Recovery Makes Progress,But Still Risks

(Adds comments from Weber, finance minister.)

By Andrea Thomas

Of DOW JONES NEWSWIRES

ST. ANDREWS, Scotland -(Dow Jones)- Confidence is gradually returning to the economy, in particular financial markets, but the recovery remains fragile and depends somewhat on stimulus from central bankers and governments, European Central Bank governing council member Axel Weber said Saturday.

Financial markets "have seen a trend towards an easing of tensions," Weber said, speaking after a meeting in Scotland of finance ministers and central bank chiefs from the Group of 20 leading nations. He added that the market's risk aversion "is gradually returning to more normal [levels]."

"The economic turnaround in the industrial sector has clearly started...and we also see a pickup of foreign trade. However, we still have to draw attention to the fact that a strong contribution to the economic recovery comes for the monetary, fiscal and also banking rescue programs," Weber said. "We have to see also here that the progress is still fragile."

Weber added that G20 officials agreed at their meeting Saturday that "the recovery of the world economy makes progress...in all areas of the world economy, but there are still risks attached." He also said the G20 has given " quite a positive" assessment on the state of the economy and financial markets.

Speaking at the same press conference, German Finance Minister Wolfgang Schaeuble signaled that Germany's center-right government supports the introduction of a global financial transaction levy, as did the previous grand coalition government, voted out of office in September.

A common position is needed from Group of 20 nations on introducing any instruments to let the banking sector share the burden of the financial crisis, said Schaeuble after his first attendance of a G20 meeting in his new role.

"It is of course right that we can't do this on a national or regional level, we can only do it globally," Schaeuble said. "Having the banking sector contribute to overcoming the crisis is not completely wrong when looking at the principle of sustainability and justice."

Earlier Saturday, U.K. Prime Minister Gordon Brown said the G20 leading economies should consider applying a tax on global financial transactions to pay for the cost of future banking crises, signaling a shift in the country's position, whose economy relies heavily on the financial sector. In the past, the U.K. has leaned against the idea of such a tax.

Commenting on financial market regulation, Weber said it is now up to national governments to implement the agreed reforms, such as those regarding capital requirement rules.

"For instance, Basel II must be implemented in the U.S," said Weber, referring to the Basel II capital adequacy rules. Those countries that have already implemented Basel II rules must now improve their national rules, he added.

Overall, the G20 has made progress in its efforts to tackle financial market reforms, Weber said.

"It's now important to keep up with reform efforts," said Weber. "The crisis is starting to resolve on markets, we must make progress on two important points: containing systemic risks...and not only implementation of new standards, but the consequent and intentionally consistent implementation of these standards."

-By Andrea Thomas, Dow Jones Newswires; +49 30 2888 4126; andrea.thomas@ dowjones.com

  (END) Dow Jones Newswires
  11-07-091321ET
  Copyright (c) 2009 Dow Jones & Company, Inc.