European leaders meet to drive forward market reform
European Union (EU) leaders and finance ministers began arriving in Berlin for a meeting aimed at driving forward an overhaul of the world financial system and stepping up efforts to combat the global economic crisis.business Updated: Feb 22, 2009 16:57 IST
European Union (EU) leaders and finance ministers began arriving in Berlin on Sunday for a meeting aimed at driving forward an overhaul of the world financial system and stepping up efforts to combat the global economic crisis.
Hosted by German Chancellor Angela Merkel, Sunday's meeting was called to set out Europe's position on financial market reform and tackling the recession ahead of the April summit in London of the Group of 20 (G20) major economic powers.
Sunday's meeting comes in the wake of another week of global market turmoil, which has underscored mounting concerns about the deepening sense of crisis surrounding the financial systems in Central and Eastern Europe (CEE) as well as parts of the 16-member eurozone, notably Ireland and Greece.
At one point last week Europe's common currency hit a three-month low against the dollar with share markets slumping sharply.
In her weekly video podcast released ahead of the meeting, Merkel again called for stepped up action to close the gaps in the world-wide regulation of markets as part of an attempt to head off the threat of future of financial market turmoil.
There could no longer be "blank spots" where regulations don't apply in the wake of the financial meltdown, Merkel said.
Spelling out the details of Merkel's call for boosting global market regulation, German Finance Minister Peer Steinbrueck said in a paper released Saturday that no financial market or product or those involved in investment markets should remain outside the regulatory net. This included hedge fund investments.
The steps formed part of what finance ministry paper called "effective early warning mechanisms" to face up to financial firestorms in the future.
The paper also calls for increased transparency and accountability in the financial system as well as measures to avoid undue risk taking through controls on executive pay and a crackdown on tax havens.
To be held in the chancellor's office, the weekend EU meeting is expected to repeat calls for revamping the world financial system to ensure greater coordination between national supervisory authorities while boosting government efforts to spur economic growth.
This could include beefing up the role of the International Monetary Fund (IMF) and the Financial Stability Forum, which was established a decade ago to boost co-operation between national financial supervisory bodies. In addition, Berlin hopes to substantially boost the funds for the IMF.
In the face of the slowdown, Merkel will also press her colleagues from France, Britain, Spain, the Netherlands and Italy to draw up a new charter aiming at ensuring sustainable economic growth.
But the Berlin summit is also expected to warn again about the economic threat posed by protectionism as nations attempt to shield their economies from recession.
At the same time, the meeting in Berlin is also likely to renew the drive to reactivate the stalled world trade talks and to facing up to the economic crisis does not mean that efforts at addressing global warming are pushed to the sidelines.
At their meeting in Washington last November, the G20 leaders drew up 47 points needing action in the face of the global crisis.
G20 officials are currently attempting what is proving to be the difficult task of coming to grips with the specifics of the changes to the international financial architecture called for in Washington. They have until the end of next month to present their proposals.
Also attending the gathering in Merkel's Berlin office will be the Czech Republic leaders, which currently hold the EU's six-month rotating presidency, as well Luxembourg Prime Minister Jean-Claude Juncker who as president of the euro group representing the eurozone.
European Commission, executive body of the EU, President Jose Manuel Barroso and European Central Bank chief Jean-Claude Trichet and Bank of England Governor Mervyn King have also been invited to the Sunday meeting.