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EU leaders aspire to global financial reform
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16:03, February 24, 2009

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A preparatory meeting of the Group of 20 was held in Berlin last Sunday, February 22. Apart from top officials from Germany, France, Britain and Italy, the four leading member states of the European Union (EU), the meeting was also attended by government leaders of Spain, the Netherlands, and the Czech Republic, which currently holds the EU presidency, as well as top EU officials.

These ace EU officials are, among others, Jose Manuel Barroso, the president of the European Commission, Jean-Claude Juncker, the president of the Eurozone, and Jean-Claude Trichet, the president of the European Central Bank (ECB).

This G-20 preparatory meeting was designed to seek response and coordination measures before the financial summit of the G-20 group of industrialized and emerging-market economies scheduled for April 2 in London.

The Berlin meeting hosted by German Chancellor Angela Merkel agreed on seven measures to help restore confidence in markets. These plans include doubling the budget of the International Monetary Fund (IMF) to provide immediate support for countries in need. Leaders also decided to improve the transparency of the world financial market and to penalize uncooperative jurisdiction and tax havens as proposed by Germany. The measures could be reached in time for discussion and deliberation at the EU's regular spring summit of March 19-20.

European leaders backed Merkel's call for "a charter of sustainable economic activity" to guide a reduction of economic imbalance and to stabilize financial markets. The leaders also agreed to strengthen the (role) of IMF and the Financial Stabilization Forum, which was set up by the G-7 countries in April 1999, after the Asian financial crisis.

In view of the seriousness of the ongoing, surging global financial crisis, leaders participating in the meeting called for assuring, without fail, the success of imminent London financial summit. The crisis can be phased out only when the structural reform is done to the international financial system, they noted. At a news conference held at the end of the meeting, Chancellor Angela Merkel called for adopting a "sanction mechanism" to penalize "tax havens" and establishing a blacklist of those unwilling to adhere to the international cooperation prior to April 2.

The incoming April London Summit, the follow-up meeting of the Washington Summit on Financial Market and World Economy which was convened on 14-15 November 2008, is primarily up to the task of designing a suitable response to the global financial crisis. To this end, said Chancellor Merkel, the Berlin meeting is hoped to contribute in reforming the international financial system. "A clear message and concrete actions are necessary to engender new confidence in the markets and to put the world back on a path toward more growth and employment," Merkel said. Leading EU nations, nevertheless, have their own respective expectations for the London financial summit.

As the government of the hosting nation of the summit, the British government, however, is going to focus chiefly on such difficult, thorny issues like the revitalization of world economy, global trade and climate change, but it is relatively conservative with respect to the global financial reform and particularly with the regulation of hedge funds, as Britons maintained that the basic mode of free economy should not be weakened.

In comparison, France and Germany aspire for concrete, substantial progress in the relevant reform of global financial system in an effort to deal with "tax haven" and find out the exact measures in response. Both nations insist that hedge funds be reported to the monitoring institutions or authorities, so as to make them increasingly transparent and subject them to more rigid supervision.

What vital important measures involved are precisely to take prompt actions and impose restrictive measures on the financial market and mete out stern sanctions to violators of (financial) market rules, according to the German newspaper "Stuttgarter Zeitung Daily" last Sunday. Meanwhile, the German television station "ART-GTS" noted that the Berlin meeting has taken another step forward in enabling EU to add transparency to its financial market and intensify financial monitoring, adding that EU still needs to beef up cooperation with the U.S., China and other countries if the EU wants to overcome the global financial crisis eventually.

The EU is an initiator of the G-20 global financial summit and the international financial reform, so it would avail itself of this opportunity for a bigger say on the establishment of a new global financial order. To attain this objective, EU has, first of all, to speak with one voice nevertheless. Therefore, EU leaders will meet again prior to the London summit, respectively on March 1 and March 19 to communicate and coordinate their positions on major issues in a bid to seek their common ground.

By People's Daily Online and contributed by PD special correspondent Li Yongqun


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