ABSTRACT
The Group of Seven (G7), Group of Eight (G8), and the summit process has failed to deal effectively with the most pressing economic issue of the day, that is, fast-developing liquidity crises of domestic financial sectors. As the G8 evolves, the elite club has shown that it is willing to tackle issues that are domestic in nature yet have an international linkage. Responses of the G8 to contemporary economic problems, which are rooted in the financial sector as opposed to the real sector, have been to ignore, minimize, and delegate to the International Monetary Fund (IMF). In the longer-run, the G8 should rethink completely the role and even the necessity of the IMF and the World Bank. It is vital that the G7/G8 formulate a coherent and consistent approach to bailouts of future financial crises. Most capital flows and foreign exchange transactions occurred to finance and facilitate transactions in the real sector.
