The principles involve deposit insurance, bank recapitalization, preventing systemic risk and unfreezing credit markets. Each country will interpret and act on the principles as they see fit.

G7 nations agreed to "use all available tools" to support financial institutions and prevent their failure, including using all necessary steps to open up credit and money markets so banks have access to liquidity.

The ministers also said they would ensure banks and other financial intermediaries could raise capital from both public and private sources, which should restore confidence in order to lend money to households and businesses.

The G7 also said it supported insurance and guarantee programs for bank deposits so retail depositors will have confidence in the protection of their deposits.

The statement said the G7 would "take action, where appropriate, to restart the secondary markets for mortgages and other securitized assets," and that accurate valuation of assets, plus the implementation of high quality accounting standards, would be necessary.

"The actions should be taken in ways that protect taxpayers and avoid potentially damaging effects on other countries," the joint statement said. "We will use macroeconomic policy tools as necessary and appropriate."

The statement concludes: "We will accelerate full implementation of the Financial Stability Forum recommendations and we are committed to the pressing need for reform of the financial system. We will strengthen further our cooperation and work with others to accomplish this plan."

Sherry Cooper, chief economist at BMO Capital Markets, said unconventional actions are required to salvage the banking system.

"Details are scanty at this point and rightly so, but the principles will reassure markets," she wrote in a client note. "While this financial crisis is pervasive and prolonged, these announcements should help to mitigate the collateral damage. On a fundamental basis, however, economic activity on a global basis has been negatively impacted. There are no quick fixes here."

By Patrick McGee, This email address is being protected from spam bots, you need Javascript enabled to view it and Adam Button This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Stephen Huebl, This email address is being protected from spam bots, you need Javascript enabled to view it

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