By Ariana Eunjung Cha
Washington Post Foreign Service
Saturday, October 25, 2008; 1:37 PM
SHANGHAI, Oct. 25 -- Leaders from Asia and Europe on Saturday called for new rules and stronger regulation of the global monetary and financial system at the close of a two-day summit in Beijing as China assumed a new leadership role in the crisis.
Chinese Prime Minister Wen Jiabao said the world's economic problems had become so massive that measures beyond the many billion-dollar bailout packages already announced might be necessary to avert further damage.
"We are very glad to see that many countries have taken measures that have initially proved effective. But this is not enough given the current situation, and more needs to be done," Wen said Saturday, a day after dire corporate earnings reports from all corners of the world pushed Wall Street to a five-year low.
Wen also said stricter regulation might be key to recovery. "Lessons should be learned from the financial crisis, and the responsibilities should be clarified for governments, companies and supervision, respectively," he said.
The Asia-Europe Meeting, last held in 2006, traditionally does not result in any policymaking. This year's gathering, however, had taken on a new urgency as the world teeters on the edge of a global recession.
In a joint statement, the more than 40 world leaders in attendance -- including Japanese Prime Minister Taro Aso, German Chancellor Angela Merkel and French President Nicolas Sarkozy -- said they recognized "the need to improve the supervision and regulation of all financial actors, in particular their accountability" and pledged "to undertake effective and comprehensive reform of the international monetary and financial systems."
Although the leaders spoke only of broad principles and did not offer details on specific proposals, it was clear the groundwork was being laid for a Nov. 15 meeting on the crisis that President Bush is hosting in Washington.
The Beijing meeting appeared to be a victory for Sarkozy, who has taken the lead in representing his European Union colleagues in pushing for an overhaul of the world's financial systems and the creation of a new "regulated capitalism" as soon as possible. Sarkozy has said such steps cannot wait until a new U.S. president takes office.
President Bush has said, however, that enacting ideas into law "must be a top priority for the next president and the next Congress."
Sarkozy said Asian leaders have joined their European counterparts in expressing a "willingness for the Washington summit to be a place where we make some decisions, and we have all understood that it would not be possible to simply meet and have a discussion. We need to turn it into a decision-making forum."
The major issues expected to be addressed by world leaders in the coming months and years include the future role of the International Monetary Fund in stabilizing economies, currency reform and measures to help prop up cross-border banks.
The participants in the summit said the IMF "should play a critical role in assisting countries seriously affected by the crisis." Merkel called for the IMF to become a "guard for the stability of the international finance system" but it did not offer further guidance.
As more developing countries are being hit by the turmoil, the IMF is proposing an emergency program that would double borrowing limits and waive some of its standard demands for loans. The fund has agreed to lend Iceland $2.1 billion after its banking system collapsed.
For the past few months, China has stood on the sidelines as country after country became caught up in the financial maelstrom. Many countries have looked to China for leadership as the world's fastest-growing major developing economy. But Chinese leaders have repeated a standard response: that China's first priority was protecting its own economy.
China had been slow to respond to calls from its Asian neighbors to meet to discuss regional measures and was noncommittal about whether it would attend the Nov. 15 meeting, which will bring together the Group of 20 industrialized and developing nations.
But with news this week that China's growth had decelerated to 9 percent, its slowest rate since 2003, the country's leaders appeared to step up.
Wen on Saturday emphasized that China would not only attend the U.S.-hosted talks but would also play an active role. "I think what we should do to cope with the crisis can be summarized as confidence, cooperation and responsibility," he said.
Shortly before the Asia-Europe Meeting began, China joined South Korea, Japan and 10 Southeast Asian nations in announcing the creation of a $80 billion fund that the countries could use to fight currency speculators.
China also announced that it had agreed to more "timely" phone conversations about the world financial situation with Japan, with which it has long had a tense relationship over the issue of apologies and reparations for atrocities committed during World War II.
Asian and European Leaders Urge New Financial Rules - washingtonpost.com
Washington Post Foreign Service
Saturday, October 25, 2008; 1:37 PM
SHANGHAI, Oct. 25 -- Leaders from Asia and Europe on Saturday called for new rules and stronger regulation of the global monetary and financial system at the close of a two-day summit in Beijing as China assumed a new leadership role in the crisis.
Chinese Prime Minister Wen Jiabao said the world's economic problems had become so massive that measures beyond the many billion-dollar bailout packages already announced might be necessary to avert further damage.
"We are very glad to see that many countries have taken measures that have initially proved effective. But this is not enough given the current situation, and more needs to be done," Wen said Saturday, a day after dire corporate earnings reports from all corners of the world pushed Wall Street to a five-year low.
Wen also said stricter regulation might be key to recovery. "Lessons should be learned from the financial crisis, and the responsibilities should be clarified for governments, companies and supervision, respectively," he said.
The Asia-Europe Meeting, last held in 2006, traditionally does not result in any policymaking. This year's gathering, however, had taken on a new urgency as the world teeters on the edge of a global recession.
In a joint statement, the more than 40 world leaders in attendance -- including Japanese Prime Minister Taro Aso, German Chancellor Angela Merkel and French President Nicolas Sarkozy -- said they recognized "the need to improve the supervision and regulation of all financial actors, in particular their accountability" and pledged "to undertake effective and comprehensive reform of the international monetary and financial systems."
Although the leaders spoke only of broad principles and did not offer details on specific proposals, it was clear the groundwork was being laid for a Nov. 15 meeting on the crisis that President Bush is hosting in Washington.
The Beijing meeting appeared to be a victory for Sarkozy, who has taken the lead in representing his European Union colleagues in pushing for an overhaul of the world's financial systems and the creation of a new "regulated capitalism" as soon as possible. Sarkozy has said such steps cannot wait until a new U.S. president takes office.
President Bush has said, however, that enacting ideas into law "must be a top priority for the next president and the next Congress."
Sarkozy said Asian leaders have joined their European counterparts in expressing a "willingness for the Washington summit to be a place where we make some decisions, and we have all understood that it would not be possible to simply meet and have a discussion. We need to turn it into a decision-making forum."
The major issues expected to be addressed by world leaders in the coming months and years include the future role of the International Monetary Fund in stabilizing economies, currency reform and measures to help prop up cross-border banks.
The participants in the summit said the IMF "should play a critical role in assisting countries seriously affected by the crisis." Merkel called for the IMF to become a "guard for the stability of the international finance system" but it did not offer further guidance.
As more developing countries are being hit by the turmoil, the IMF is proposing an emergency program that would double borrowing limits and waive some of its standard demands for loans. The fund has agreed to lend Iceland $2.1 billion after its banking system collapsed.
For the past few months, China has stood on the sidelines as country after country became caught up in the financial maelstrom. Many countries have looked to China for leadership as the world's fastest-growing major developing economy. But Chinese leaders have repeated a standard response: that China's first priority was protecting its own economy.
China had been slow to respond to calls from its Asian neighbors to meet to discuss regional measures and was noncommittal about whether it would attend the Nov. 15 meeting, which will bring together the Group of 20 industrialized and developing nations.
But with news this week that China's growth had decelerated to 9 percent, its slowest rate since 2003, the country's leaders appeared to step up.
Wen on Saturday emphasized that China would not only attend the U.S.-hosted talks but would also play an active role. "I think what we should do to cope with the crisis can be summarized as confidence, cooperation and responsibility," he said.
Shortly before the Asia-Europe Meeting began, China joined South Korea, Japan and 10 Southeast Asian nations in announcing the creation of a $80 billion fund that the countries could use to fight currency speculators.
China also announced that it had agreed to more "timely" phone conversations about the world financial situation with Japan, with which it has long had a tense relationship over the issue of apologies and reparations for atrocities committed during World War II.
Asian and European Leaders Urge New Financial Rules - washingtonpost.com
