Finance leaders from the world's top industrialized nations came together in Tokyo to address the economic slowdown and acknowledged that the situation could worsen due to the deteriorating U.S. housing market. In a statement released after their meetings, the Group of Seven mentioned that economic growth prospects had declined since their last meeting in October, but emphasized that the fundamentals were still strong and the U.S. economy was expected to avoid a recession. Italian Economy Minister Tommaso Padoa-Schioppa noted that there was a greater sense of pessimism and concern compared to October. The finance ministers and central bankers from Japan, the United States, Canada, Britain, Germany, Italy, and France stated that growth in their respective countries was expected to slow to varying degrees in the short term. They highlighted the significant risks posed by the U.S. housing market slump and the resulting tightening of credit conditions, which has impacted the flow of money to consumers and businesses that drive the global economy. Banks burdened by debt are reducing lending due to increasing losses related to declining U.S. home loans exceeding $100 billion. This has led to concerns of a harmful cycle where consumer spending decreases, causing businesses to cut jobs. Glenn Maguire, Asia Pacific chief economist with Societe Generale in Hong Kong, pointed out that the G7 did not provide much detail on coordinated efforts to support the economy. He stated that the economic shock and downturn are mainly due to U.S. domestic issues and cannot be solved by a globally coordinated plan. U.S. Treasury Secretary Henry Paulson mentioned that global markets might experience a prolonged period of instability. In prepared remarks issued after the meeting, Paulson stated that the ongoing financial crisis is severe and enduring. He also mentioned that as the financial markets recover from the stress, there will likely be continued volatility as risk is reevaluated. The G7 leaders emphasized the importance of banks fully disclosing their losses and strengthening their balance sheets to help restore normal market functioning. German finance minister Peer Steinbrueck warned that writeoffs could amount to $400 billion. The leaders also pledged to closely monitor developments and take necessary actions to ensure stability and growth in their economies. Promises to collaborate on restoring the financial system's health were overshadowed by disagreements over fiscal and monetary policies leading up to the G7 meeting. Concerns were raised in Europe over the US Federal Reserve's rapid interest rate cuts and fiscal stimulus package, potentially causing a divide among allies on how to prevent a global economic downturn. However, tensions eased when the European Central Bank indicated a possible rate cut, aligning with other central banks. French Economy Minister Christine Lagarde welcomed this move but emphasized the need for further action. European leaders were particularly worried about the euro's strength, which reached a record high against the dollar after the Fed started cutting rates in September. However, the currency declined after the ECB changed its stance. Currency issues were not a top priority at Saturday's meeting due to more urgent economic concerns. The communique echoed the October statement, emphasizing the need for China to allow its yuan currency to appreciate faster. G7 leaders believe that China's undervalued yuan gives them an unfair advantage in trade and are urging Beijing to increase domestic investment to help balance the global economy. The statement also recommended that oil exporters increase their production following a brief period where oil prices exceeded $100 per barrel last month. Despite prices falling afterwards, they surged by 4 percent to $91.77 on Friday - marking the largest increase in almost two months - due to supply disruptions and an approaching cold front in the U.S.