Central banks will keep a close eye on financial markets after a rough ride over the last month, policymakers said today.
Summing up talks among officials from the Group of 10 leading economies, G10 chairman Jean-Claude Trichet said the impact on the United States economy was important in assessing the hit to the global economy, which had strong fundamentals.
"This situation calls for close monitoring [and] observation," Mr Trichet said after talks at the Bank for International Settlements in the Swiss city of Basel.
"We will certainly remain alert at a global level. It is no time for complacency." Financial markets have been in turmoil since mid-August as concerns about a fallout from US subprime mortgages hit banks globally and triggered a sell-off in risky assets.
Mr Trichet said central banks had taken action to ensure stability on money markets but added: "It's certainly the sentiment of central bankers who are around the table that bailing out bad investors would be the worst thing to do."
Mr Trichet did not describe the market correction as "disorderly" but said in any serious unwinding, there were periods of volatility and overshooting, as well as a risk of fallout for the real economy.
"We are observing that we will have to follow very carefully what happens in particular in the United States."