EU leaders today set out their stall for sweeping global financial reforms ahead of an international summit in the United States next week.
Taoiseach Brian Cowen joined his 26 European counterparts for talks in Brussels to ensure the Union spoke with one voice at a Washington gathering next week of the so-called G20 group of leading industrialised and emerging economies.
Only four of the EU nations — the UK, France, Italy, and Germany — are in the G20, but today’s summit was designed to ensure that anything the four sign up to in Washington is already backed by the other 23 EU leaders.
Over lunch hosted by French President Nicolas Sarkozy, the leaders reviewed efforts so far to stabilise European banks and insisted the next step was a sweeping overhaul of the world financial system, including new powers for the International Monetary
Fund, tougher regulation and supervision of all financial sectors, and the setting up of an “early-warning system” to spot future risks and avert financial downturns on the scale the world is now facing.
An informal summit discussion paper — no binding decisions were being taken — said the Washington meeting had to build on market-calming moves already taken and set out principles for the restabilisation of the global system.
The document declared: “No financial institution and no market segment must escape regulation or supervision.”
It called for better transparency in financial markets, measures to curb “excessive risk-taking”, and the creation of “supervisory colleges” to oversee the efficient and responsible running of major international financial institutions.
The document said the Washington summit would be an “essential milestone” in the continuing reforms prompted by the financial crisis.
Almost all the points set out today have been repeated by EU leaders in a series of crisis meetings in the last month, but the job now is to carry them through to become part of a global creed endorsed by world powers as distinct as America, India and Australia.
Today’s unofficial position paper from the EU makes clear Europe’s efforts so far should not be overlooked in forging wider responses: the Washington summit should, it says “base international action on what the European Union has achieved in practice”.
The EU side wants the Washington meeting to establish urgently five long-term guidelines for reform.
They are:
Compulsory registration of credit rating agencies;
Harmonisation of accounting standards across the world;
Ensure that “no market segment, no territory and no financial institution, including geared funds” escape regulation or supervision;
Set up codes of conduct on risk-taking, and pay and bonus levels;
Give the International Monetary Fund sufficient funds to support countries in financial difficulty, and also give the IMF “primary responsibility” to recommend the necessary measures to restore confidence and stability.