Brussels - European Union leaders said Friday they were leading world efforts to reform global finance by agreeing on a common set of principles and on five specific recommendations to avert future credit crunches. The common EU position, agreed after more than three hours of "intense" discussions over lunch in Brussels, is intended to lay the groundwork for a Group of 20 summit of the world's leading economies, such as the United States, China and India, due to take place in Washington on November 15.
"We want to change the rules of the game in the financial world," said French President Nicolas Sarkozy, whose country holds the rotating presidency of the EU.
"We Europeans are proposing to the rest of the world some common principles, some common rules," said European Commission President Jose Manuel Barroso.
Europe's "vision" for restructuring the global financial system is based on four broad principles: a crackdown on tax havens and unregulated financial institutions; better accountability and transparency; crisis prevention; and a "central" role for the International Monetary Fund (IMF).
These in turn should lead to five specific recommendations:
- stricter controls on rating agencies, which have been widely blamed for contributing to the current financial crisis;
- converging accounting standards;
- "no market segment, no territory, and no financial institution should escape proportionate and adequate regulation";
- codes of conduct aimed at avoiding "excessive risk-taking" in the financial sector, including by managers;
- give the IMF the "necessary resources and appropriate instruments" to support countries in difficulty and recommend measures needed to restore confidence and stability.
The EU's proposals should be drawn up within 100 days of the Washington summit and be reviewed by a second G20 meeting early next year, the paper says.
"At the summit in Washington we should be able to come up with reactions and answers to the financial crisis," Sarkozy said.
"We are going to Washington with a firm will, and we expect a very clear answer," said German Chancellor Angela Merkel.
The EU leaders' sense of urgency about hammering a quick fix comes amid evidence that a sharp economic downturn is taking shape as a result of the turbulence which engulfed world markets in recent months.
The five-page text agreed in Brussels was significantly softer than an initial document circulated by the French presidency ahead of the meeting.
The compromise followed complaints from some member states that France was seeking to "over-regulate" the sector and dilute the powers of national authorities.
"There is a risk that we over-regulate and that we are too quick in our response. That's why I say fewer but more effective regulations, and take the time to analyse to go through what is needed to be done," Swedish Prime Minister Fredrik Reinfeldt, who emerged as one of the main critics of the French text, said.
Sarkozy is now set to travel to Washington to represent the EU in his capacity as holder of its presidency. The leaders of Britain, Germany and Italy are also set to attend the summit as permanent members of the so-called Group of 20.
It was still unclear Friday whether US president-elect Barack Obama would also be attending the meeting alongside the incumbent, George W Bush.
The Czech Republic is due to send an official in its capacity as the next holder of the EU presidency, while Spain and the Netherlands are still lobbying for an invitation.
Barroso, who is also travelling to Washington, said he would ensure that "the common interests" of all 27 EU member states would be represented.
