A key reason for the 30pc rise in the euro against the dollar over the last two years has been the move by Asia central banks and Mid-East wealth funds to parking huge sums of newly acquired wealth in European bonds as an alternative to the dollar.

G7 ministers meeting in Washington

The G7 has met ahead of the World Bank and IMF weekend meetings

The G7 group of most industrialised nations has approved a plan aimed at easing the continuing crisis in the global credit markets.

Including calls for more oversight of financial firms and greater financial transparency, G7 members have committed themselves to its implementation.

The plan also aims to improve the work of credit rating agencies.

The announcement was made after a meeting of the seven nations, including the US, UK and Germany, in Washington.

“We remain positive about the long-term resilience of our economies, but near-term global economic prospects have weakened,” said a statement issued by the G7 after the meeting.

The plan further calls for the strengthening of authorities’ responsiveness to financial risks, and puts in place arrangements to deal with stress in the financial system.

It was drawn up for the G7 by the Financial Stability Forum (FSF) think-tank.

The FSF is comprised of a number of central bank and treasury officials from around the world.

“We have worked, and will continue to work, closely to address global challenges and take concrete actions,” said US Treasury Secretary Henry Paulson.

‘Urgent action’

Before the G7 meeting, UK Chancellor Alistair Darling described the credit squeeze as the “biggest economic shock” the world has seen since the 1930s Great Depression.

He said the G7 had to take “urgent action”.

The other G7 members are France, Italy, Japan and Canada.

The G7 finance ministers had gathered before World Bank and IMF meetings on Saturday and Sunday.

The credit crisis stemmed from a slowdown in the US housing market and has had a knock-on effect worldwide and dented growth.

Earlier this week the International Monetary Fund (IMF) forecast that the US would enter a “mild recession” in 2008 and said that the credit crunch could cost banks and other financial institutions around $1 trillion.

The weakening US economy has been a major factor in pushing down the value of the dollar, which slipped to a 15-year low against the pound earlier in the week.

Meanwhile the pound has fallen sharply against the euro.

NEW YORK - Wall Street stumbled Friday after a disappointing first-quarter report from General Electric Co. surprised the market and stoked concern about the health of both corporate profits and the wider economy. The major indexes fell more than 2 percent, with the Dow Jones industrials giving up more than 250 points.

A weaker-than-expected reading showing consumer confidence at a 26-year low subdued any positive sentiment.

GE, which is regarded as a bellwether of big business, said its financial-services divisions have been challenged by the slowing U.S. economy and difficult capital markets. The company, whose orbit extends into entertainment, consumer and industrial manufacturing, finance and health care, also lowered its projections for the entire year.