EU leaders seek global bank reform
Summit in Brussels calls for increased and co-ordinated regulation of financial system.
He said the world summit would discuss increased international financial regulation and would also aim to relaunch stalled global trade talks.
Meanwhile, fears of recession fears saw share prices in Europe plunge on Wednesday.
At close, Frankfurt’s Dax 30 index slipped by 6.49 per cent to 4,861 points, French stocks dipped 6.82 per cent to 3,381 points and London’s FTSE100 was down 7.16 per cent to 4,079 points.
International regulation
Jose Manuel Barroso, the European commission president, said he wanted the two-day summit in the Belgian capital to decide how nations should work together to monitor the financial sector, which he said would prevent future problems.
The meeting is also set to debate increasing a guarantee on European bank deposits to $136,760 to be implemented within the next 12 months.
Echoing Barroso’s message, Brown called for tighter monitoring of global financial institutions.
The British prime minister 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.”
Brown said an overhaul of global financial bodies like the Washington-based International Monetary Fund (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.
Angela Merkel, the German chancellor, also called for a meeting between the G-8 group of the world’s leading industrialized nations and emerging economies, saying they had to make decisions “so that something like this can never happen again”.
Emerging nations
Europe’s call for global action came as India, Brazil and South Africa asked 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.”