ROME (Reuters) - Desperate to pull their economies out of recession, Group of Seven central bankers meeting in Rome this weekend exchanged notes on what they can do once interest rates cannot go down any further.

With US and Japanese rates already virtually zero, and the Bank of England and European Central Bank heading that way, printing money is understood to be the next step — with the banks buying assets to raise money supply and thereby boost demand in the economy.

So-called quantitative easing was applied in Japan with mixed results in the early part of this decade as part of that country's long battle with deflation, a damaging spiral of descending prices which leads consumers to defer spending.

It is now being considered by most of the world's major central banks as the world experiences its most significant and synchronised downturn in decades.

The US Federal Reserve, which has cut interest rates to between zero and 0.25 percent, has already started what it prefers to call "credit easing" and the Bank of England could follow suit as quickly as next month.

Euro zone policymakers are watching, but European Central Bank President Jean-Claude Trichet said the ECB had not drawn any particular conclusions after discussions with other central banks. "I have said that I did not exclude additional non-standard action but no decision as been taken yet on top of the non-standard action we have already decided to do and we will see," he told reporters on Saturday.

"When and if (there is) something more to say we will say it."

Fellow ECB policymakers Mario Draghi, Christian Noyer and Axel Weber said the ECB was already taking non-standard steps by flooding markets with liquidity and gave no indication that they were ready to move to the next step of direct asset purchases.

Noyer, who heads the Bank of France, said the action the ECB had already taken was starting to bear fruit.

"If you saw tensions returning or the improvements stopping ... we would have to be ready to put in place extra measures if it was necessary," he said when asked about buying corporate debt. "Today things are working well."

The ECB held interest rates at two percent this month but is widely expected to cut them to a record low of 1.5 percent next month, especially after figures out on Friday showed the euro zone economy shrinking 1.5 percent in Q4 of 2008. Little improvement is expected in the short-term.

"Looking at the evolution of the first quarter, we see (this) as negative also," Trichet said.

Bundesbank President Weber said that while monetary policy was already more accommodative than might be suggested by its headline rate, there might be room for more easing.

"I do not rule out that we will try to play an active role with proactive rate-cuts to stabilise the economy," he said.

Weber noted there were only 80 basis points difference between short-term market rates in the euro zone (EONIA-) (EURIBOR-) and their US equivalents, and said the difference in real terms was negligible given higher euro zone inflation.

The ECB's move to provide banks with all the funds they need at fixed interest rates also made the ECB's overnight deposit rate — now at one percent — the "dominant" interest rate.