Finance leaders from the top industrialized nations came together in Tokyo to show unity in the face of a slowing global economy and acknowledged that the situation could deteriorate further due to the weakening U.S. housing market. Following their meetings, the Group of Seven released a statement indicating that economic growth prospects had worsened since their last gathering in October, although they believed that the fundamentals were still strong and the U.S. economy was likely 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 expressed that growth in their countries was expected to slow to varying degrees in the short term. They highlighted the serious risks posed by the U.S. housing market decline and subsequent tightening of credit conditions, which has hindered the flow of money to consumers and businesses that drive the global economy. Banks with high levels of debt have reduced their lending due to increasing losses, particularly related to failing U.S. home loans, surpassing $100 billion. This has led to concerns about a harmful cycle as consumer spending declines, causing businesses to cut back and lay off workers. Glenn Maguire, Asia Pacific chief economist at Societe Generale in Hong Kong, pointed out that the G7 did not provide much detail on collaborative efforts to support the economy. He stated that the economic troubles are mainly caused by domestic issues in the U.S. and cannot be fixed through a globally coordinated plan. U.S. Treasury Secretary Henry Paulson warned that global markets might experience a prolonged period of instability. In his prepared remarks following the meeting, Paulson stated that the current financial crisis is severe and ongoing. He emphasized that although the financial markets will eventually recover from this stressful period, there will likely be continued volatility as risks are reassessed. The G7 leaders collectively urged banks to be transparent about their losses and strengthen their balance sheets to help the markets function normally again. German finance minister Peer Steinbrueck estimated potential writeoffs to amount to $400 billion. The leaders stated in a communique that they will closely monitor developments and take necessary actions, both individually and collectively, to ensure stability and growth in their economies. Promises to collaborate in order to revive the financial system were overshadowed by disagreements regarding 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 when the European Central Bank indicated a possible rate cut to support economic growth. French Economy Minister Christine Lagarde welcomed the ECB's decision, 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 cutting rates in September. However, the euro weakened after the ECB's change of stance. Foreign exchange matters took a back seat at Saturday's meeting due to more urgent economic issues. The communique echoed the October statement, emphasizing the need for China to allow its currency to appreciate faster. Some G7 leaders believe that China's undervalued yuan gives them an unfair trade advantage and have urged Beijing to increase domestic investment to help rebalance the global economy. The statement also recommended that oil exporters increase their production following a brief rise in oil prices to over $100 per barrel last month. However, prices have since decreased, but they rose by 4 percent to $91.77 on Friday - the largest increase in almost two months - due to supply disruptions and an upcoming cold spell in the United States.