Tue, Feb 24, 2009 page10

• EU stresses need for financial oversight

  FUNDING The European leaders also agreed to add US$250 billion to the IMF budget to assist central and eastern European countries as Western banks withdraw credit

  • AFP
  • • 
    • 
    • 

  The heads of Europe’s largest economies agreed on Sunday on the need for greater regulation of financial markets and to double IMF funding to avoid a repeat of the global economic crisis.

  The leaders of Britain, France, Germany, Italy, Spain and the Netherlands met in Berlin to hammer out a joint European stance for the G20 meeting of developed and developing countries in London on April 2.

  They agreed that “all financial markets, products and participants — including hedge funds and other private pools of capital which may pose a systemic risk — must be subjected to appropriate oversight or regulation,” a summary of the meeting said.

  The leaders proposed adding an extra US$250 billion, double the current level of funding, to the IMF budget so it can work more effectively to prevent future financial crises.

  British Prime Minister Gordon Brown said a reinforced IMF would be able to help central and eastern European countries swept up in a growing economic crisis as western banks withdraw credit.

  “We are proposing today ... a US$500 billion IMF fund that enables the IMF not only to deal with crises when they happen but to prevent crises,” Brown told a press conference.

  “There is a need for a global New Deal so that the world economy can recover,” he said, referring to the plan to end the 1930s Great Depression.

  French President Nicolas Sarkozy said participants in the April summit to be attended by US President Barack Obama “will bear a historical responsibility” and warned that concrete decisions had to be reached by then.

  “By April 2, we have to succeed and we cannot accept that anything or anyone gets in the way of that summit ... if we fail there will be no safety net,” Sarkozy said.

  German Chancellor Angela Merkel said Europeans were determined that a better-regulated financial system would emerge from the wreckage of the deepest financial crisis since World War II.

  “It’s not a case of talking up the situation, but we want to send the message that we have a real opportunity to come out strengthened from this crisis,” she said.

  German Foreign Minister Frank-Walter Steinmeier, whose Social Democrats will challenge Merkel’s party in September polls, told the Financial Times that “the turbo-capitalism of the past few years is dead, irrevocably so.”

  “We must now create a new order for the future. The conditions for this are auspicious. This shock is deep, not only in continental Europe but in the US and UK,” he said.

  But a joint stance on the funds — highly speculative and lightly regulated entities accused of fueling instability in financial markets — represents a shift in the long-held position of countries like Britain.

  London had resisted greater regulation of hedge funds, which supporters say benefit the economy in part by bearing risks others are unwilling to take, though Brown called recently for stronger rules.

  The results of the meeting on Sunday will be discussed by all 27 EU members at summits next month. But agreement might be hard to find, said Czech Prime Minister Mirek Topolanek, whose country holds the rotating EU presidency.

  He said Sunday’s talks had exposed deep rifts.

  “If I put it very tenderly, the divergence in opinions was rather big,” Topolanek told reporters on the plane home.

  “It was obvious that the four countries representing the EU in the G20 [France, Germany, Britain, Italy] do not have the same opinion on a number of issues,” he said.

  “Our responsibility [as holders of the presidency] is to look for some unity. This won’t be easy at all,” he said.
• Most Popular

  • 1

    MAC warns of PRC arrests, detentions

  • 2

    US exempts security funds for Taiwan

  • 3

    Taiwan blacklists two Chinese schools

  • 4

    Actor, 11 others suspected of dodging military service

  • 5

    French aircraft carrier stages drills with Philippines