Finance leaders from the top industrialised nations of the world showed unity in response to an economic slowdown and acknowledged that the situation could worsen due to the deteriorating US housing market. The Group of Seven released a statement after meetings in Tokyo, stating that economic growth prospects had declined since their last meeting in October. While they noted that the fundamentals were stable and the US economy was likely to avoid a recession, there was a sense of increased pessimism and concern compared to October. Ministers and bankers from Japan, the US, Canada, the UK, Germany, Italy, and France predicted varying degrees of slowdown in their countries in the near future. They highlighted the significant risks posed by the US property market decline and the resulting credit tightening, which has hindered the flow of money to consumers and businesses that drive the global economy. Banks with high levels of debt are reducing their lending due to significant losses stemming from declining U.S. home loans, surpassing $100 billion. This situation has led to concerns about a negative cycle where decreased consumer spending leads to businesses scaling back operations and laying off workers. Glenn Maguire, the Asia Pacific chief economist at Societe Generale in Hong Kong, observed that the G7 did not provide much detail on collaborative efforts to bolster the economy. He stated that the current economic crisis, driven by U.S. domestic issues, cannot be effectively addressed through a globally coordinated strategy. U.S. Treasury Secretary Henry Paulson warned that global markets may endure an extended period of instability. Paulson stated that the current financial crisis is severe and ongoing. He mentioned that although the financial markets will eventually recover from this stressful period, there will still be continued volatility as risk is reassessed. The G7 leaders emphasized the importance of banks fully disclosing their losses and strengthening their balance sheets to help return markets to normal functioning. German finance minister Peer Steinbrueck estimated that writeoffs could amount to $400 billion. The leaders also expressed their commitment to closely monitoring developments and taking necessary actions to ensure stability and growth in their economies. Promises to collaborate in restoring the financial system were overshadowed by disagreements regarding fiscal and monetary policy ahead of the G7 meeting. Concerns arose in Europe over the U.S. Federal Reserve's rapid interest rate cuts and fiscal stimulus package, potentially straining relations with allies. However, tensions eased after the European Central Bank indicated it may also cut rates to address economic growth risks and inflation concerns. French Economy Minister Christine Lagarde welcomed the ECB's move but expressed a desire for more action. European leaders were especially worried about the euro's strength when it reached a record high against the dollar following the Fed's decision to cut rates in September. However, the currency weakened after the ECB's change of stance. At the Saturday meeting, foreign exchange matters were put on hold due to more urgent economic issues. The communique echoed the October statement, emphasizing the need for China to allow its yuan to appreciate at a faster pace. Several G7 leaders believe that China's undervalued yuan gives them an unfair trade advantage and are urging Beijing to increase domestic investment to help balance the global economy. The message also advised oil producers to increase production following a brief period where oil prices exceeded $100 per barrel last month. Prices have since decreased, but they rose by 4 percent to $91.77 on Friday - the largest increase in nearly two months - due to supply issues and an upcoming cold spell in the United States.