America.gov (Washington, DC)
Andrzej Zwaniecki
13 November 2008
The Bush administration expects world leaders attending a summit on the financial crisis to agree on immediate steps to address the most pressing issues and an outline of reforms that would help prevent a similar crisis.
Leaders of the Group of 20 (G20) countries are scheduled to meet in Washington November 14-15. Under Secretary of Treasury David McCormick said he expects them to discuss near-term issues such as fiscal measures to revive stagnating economies, the availability of resources at multinational banks, trade financing in emerging markets, and coordinated monetary policies.
G20 financial officials, at their November 8-9 meeting in Sao Paulo, Brazil, endorsed the call by the International Monetary Fund (IMF) for a global, coordinated fiscal action.
But McCormick, briefing reporters November 12, said that because countries' fiscal responses to the crisis differ both in timing and magnitude, "everybody being at the same place in terms of a fiscal measure [is] very unlikely." For example, U.S. officials have noted, the United States approved an economic stimulus package earlier this year and the White House is not entirely convinced that another one is needed.
Democratic leaders in Congress have been working on a new stimulus package, which is supported by President-elect Barack Obama.
G20 leaders also have expressed a desire to give political impetus to the stalled Doha round of World Trade Organization (WTO) talks, according to Bush's assistant for international economic affairs, Daniel Price, who joined McCormick at the press briefing. The WTO negotiations have stalled despite repeated attempts to revive them.
But whatever immediate action G20 leaders agree on, they also are expected to focus on medium- and long-term financial reforms to make the global financial system less vulnerable. U.S. officials have said the summit in Washington will be only the first in what they view as a series of gatherings necessary to plan and implement such reforms.
President Bush said November 13 that a common understanding of the root causes of the global crisis will help the G20 develop a strategy to reform financial and regulatory systems.
"Leaders will establish principles for adapting our financial systems to the realities of the 21st century marketplace," the president said.
Price said the financial crisis has shown a need for changes in financial regulatory structures, including strengthening transparency and accountability in financial markets, promoting their integrity, aligning national regulatory regimes, and enhancing multilateral financial institutions such as the IMF and Financial Stability Forum (FSF). According to U.S. officials, leaders may discuss such specific issues as global accounting standards, complex financial products, credit rating agencies and market manipulation.
Bush said "different countries will naturally bring different perspectives" to the summit. Large emerging-market countries, which are likely to be the main sources of economic growth for the foreseeable future, have demanded more say in world economic and financial affairs.
The United States has strongly supported giving those nations more voting and related power in governing structures of the International Monetary Fund and other multilateral institutions.
"We can't simply task the IMF, FSF or other international financial institutions to solve the problems, unless member nations all see that they have a shared interest in a solution," U.S. Treasury Secretary Henry Paulson said November 12.
European leaders have called for strong global regulatory measures. British Prime Minister Gordon Brown has proposed the creation of a new international supervisory body, and France's president, Nicolas Sarkozy, urged financial regulation that applies across country borders.
U.S. officials have acknowledged the need for alignment and, in some areas, convergence of national financial regulation. But they view calls for universal global regulation and new international regulatory bodies as unrealistic.
"The process is not about moving to a single global regulator," Price said. This idea has not got much traction among G20 countries, he added.
Sarkozy also has urged rewriting the rules of capitalism.
But U.S. officials caution against too-radical solutions in the haste to fix the crisis.
Bush said countries must recognize that government intervention is not "a cure-all" and warned it may hurt market efficiency if it goes too far.
Many U.S. private-sector experts support this view and urge smarter, rather than heavy, regulation.
Nevertheless, U.S. officials believe that, under pressure from a global economic slowdown and uncertainty in credit markets, the G20 countries will find themselves on the same page on many important issues.
"I actually think that there is a lot more common ground among countries who will be around the table than the rhetoric might suggest," Price said.
The full text of Bush's remarks is available from America.gov and the press briefing is available on the White House Web site.
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