Japan PM warns of euro crisis chain reaction
(CANNES) - Japanese Prime Minister Yoshihiko Noda warned that the eurozone debt crisis could trigger a chain reaction throughout the world as leaders of top economies gathered Thursday for a summit.
"In Europe, we need to avoid a chain reaction triggered by the budgetary problems in certain countries," Noda said at a business round table before the opening of the summit of leaders of the Group of 20 largest economies.
"This situation has a large impact on the real economy in Europe and outside of Europe, in emerging countries."
He said governments need to stand ready to inject money into banks and other institutions in order to prevent the financial system from collapsing.
"You can't let the financial sector collapse," said the prime minister. "You can't let the real economy suffer excessively."
Noda also warned sharp financial flows sparked by the crisis will have a considerable impact on emerging countries, which he noted have an increasingly important role in supporting global growth.
If "financial institutions pull out their funds from emerging countries it is the entire world economy that will suffer," he said, calling for stable exchange rates.
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