G8 agree global bank reform summit

Industrialised nations agree to meet with emerging states to discuss financial reform.

    Gordon Brown, right, called for tighter monitoring of global financial institutions [AFP]

    Brown said the summit should involve the United States, European nations and emerging economies such as China and India.

    He said the summit would discuss increased international financial regulation and would also aim to relaunch stalled global trade talks.

    Nicolas Sarkozy, the French president, who was chairing the talks in Brussels, also announced that all 27 EU leaders had agreed to back a plan to shore up the banking sector agreed to on Sunday by Britain and the 15 countries that use the Euro.

    The measures include increasing a guarantee on European bank deposits to $136,760 to be implemented within the next 12 months.

    International regulation

    Ahead of the G8 statement, Brown had called for such a meeting to discuss reform of the international financial system, including the Washington-based International Monetary Fund (IMF).

    Brown said: "I believe there is scope for agreement in the next few days that we will have an international meeting to take common action... for very large and very radical changes."

    The prime minister said an overhaul of global financial bodies like the IMF  and the creation of better rules governing financial markets were "urgently needed so that we can restore confidence" in the global financial system.

    He said: "The IMF has got to be rebuilt as fit for purpose for the modern world. We need an early warning system for the world economy."

    Brown said creating a new international financial architecture should be "an immediate task" to restore confidence in markets.

    He said he wants a group of supervisors from major nations to monitor the world's 30 largest financial institutions.

    "We now have global financial markets but what we do not have is anything other than national and regional regulation and supervision," Brown said.

    Emerging nations

    Earlier on Wednesday, India, Brazil and South Africa had called for richer nations to consider their input on how to manage the current global financial crisis without jeopardizing the development of emerging economies.

    Their appeal came at the third summit of the three nations, who represent three of the world's major emerging economies, being held in New Delhi.

    Most emerging market stocks have fallen even harder in Asia, Russia and Latin America in recent weeks than they have in the US and Western Europe.

    Analysts say a big reason for that is that foreign investors, who over the last four years fueled the emerging markets boom, have lost their appetite for risk amid the global credit crunch and are pulling money out to meet liquidity needs at home.

    Luiz Inacio Lula da Silv, Brazil's president, said: "We are the victims of a crisis generated by the rich countries."

    SOURCE: Al Jazeera


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