Darling says G7 needs to act this weekend

By Sumeet Desai

WASHINGTON (Reuters) - The Group of Seven needs to take concrete action this weekend to stabilise the banking system and help end the worst financial crisis in generations, Chancellor Alistair Darling said on Friday.

"It is absolutely essential that the world's largest economies act together and they act together now," Darling told Reuters ahead of a meeting of G7 finance ministers and central bankers in Washington.

"We need to show that we are able not just to talk about these issues but step up the mark and do something about them."

Darling said each country should do what is appropriate for its circumstances but it was clear that this was a global problem that required collective action.

He wants the G7 to agree to provide more liquidity to the financial system and to take steps to strengthen the financial system and unfreeze money markets.

"We are in a situation where I believe it is absolutely paramount that we do everything we can to stabilise the financial system, the banking system.

"We need to ensure that banks have got the confidence to start lending to each other, where it is necessary to raise capital, governments need to help with that process."

Britain this week committed 50 billion pounds to recapitalise its banks and has also then offered to guarantee interbank lending by as much 250 billion pounds to get frozen wholesale markets working again.