Finance leaders from the top industrialized nations gathered in Tokyo expressed solidarity in the face of an economic slowdown and acknowledged the potential for the situation to worsen due to the collapse of the U.S. housing market. In a statement released after their meetings, the Group of Seven noted that economic growth prospects had deteriorated since their last meeting in October, although they believed that the fundamentals were still strong and that the U.S. economy would likely avoid a recession. Italian Economy Minister Tommaso Padoa-Schioppa stated 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 recognized that growth in their countries was expected to slow to varying degrees in the near future. They highlighted the significant risks posed by the U.S. housing 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 have reduced lending due to increasing losses, mainly from failing U.S. home loans exceeding $100 billion. This has led to concerns about a negative cycle as consumer spending decreases, causing businesses to cut back and lay off employees. Glenn Maguire, the Asia Pacific chief economist at Societe Generale in Hong Kong, pointed out that the G7 did not provide much detail on how they plan to support the economy through coordinated action. He believes that the economic issues are primarily domestic to the U.S. and cannot be solved through a global plan. U.S. Treasury Secretary Henry Paulson warned that global markets could face a prolonged period of instability. In prepared remarks issued after the meeting, Paulson stated that the current financial crisis is severe and ongoing. He mentioned that although financial markets will eventually recover from this period of stress, there will still be volatility as risk is reassessed. The G7 leaders emphasized the need for banks to fully disclose their losses and strengthen 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 appropriate actions, both individually and collectively, to ensure stability and growth in their economies. Promises to collaborate in order to fix the financial system were overshadowed by disagreements over fiscal and monetary policies leading up to the G7 meeting. Concerns were raised in Europe about the U.S. Federal Reserve's rapid interest rate cuts and fiscal stimulus package, which could strain relations with allies. However, tensions eased after the European Central Bank indicated it may also lower rates, aligning with other central banks. French Economy Minister Christine Lagarde welcomed this move but expressed a desire for further action. European leaders were particularly worried about the euro's strength against the dollar, which reached a record high after the Fed started lowering rates in September. However, the euro weakened 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 to appreciate faster. G7 leaders believe China's undervalued currency gives them an unfair trade advantage and have urged Beijing to increase domestic investment to rebalance the global economy. The statement called on oil exporters to increase production following a brief rise in oil prices to over $100 per barrel last month. Prices have since decreased but rose 4 percent to $91.77 on Friday, marking the largest gain in nearly two months. This increase was due to supply issues and an approaching cold spell in the U.S.