Policy Focus

G20 must act quickly says PES chief

Source: Press release: Party of European Socialists

Date: 14 November 2008

Danish MEP Poul Nyrup Rasmussen has called on G20 leaders meeting in Washington this weekend to act decisively and invest in growth while tightening up financial regulations.

Commenting on Friday from the US, where Rasmussen, who is also PES president, has been holding talks on the crisis with Democrats, academics and senior figures in the financial world, Rasmussen said, “I get a strong feeling that the new administration of Barack Obama will move fast to invest in growth and introduce tougher regulation for the whole US financial market.”

“Bush might try to resist regulation at this weekend’s summit but proper regulation is on its way in Europe and America.”

“That’s why this summit must get global action off to a good start, but the follow up afterwards is essential. I really look forward to president Barack Obama providing some impetus and extra leadership to get things done.”

Rasmussen said that despite the meeting being hosted by a “lame duck president”, there are a number of key decisions that need to be taken over the weekend.

“First, it is important to take up Gordon Brown’s proposal to coordinate the different economic stimulus packages being put into place across the globe. “

“The US, China, EU member states and others should sit down and coordinate their investments in order to get the biggest bang. This coordination is needed at both global and EU level.”

“It is not about telling anyone what to do, or making any country pay for any other country, it is about making sure our economies maximize the spill over effects of everyone investing at the same time.”

“It would be tragic to repeat the mistake made by Japan when it failed to invest in growth in the 1990s during its banking crisis and ended up in a decade long depression. If we can afford to save the banks we can surely afford to create new jobs for our citizens.”

“Second, there needs to be a common direction for national and EU regulation of the financial market.”

“The world can’t wait for global regulation, we need regulation in the EU, in the US, in Japan and elsewhere that moves in the same broad direction of ensuring that all players in the financial market are more transparent, have fewer conflicts of interest, do not create excessive debts and do not reward irresponsible risk-taking with vast bonuses.”

“Finally, talks must begin on a new global financial architecture. The PES has a long-term ambition to create a World Financial Organisation, a body with real and binding powers rather than the very soft power of Basel II.”

“But this will take long talks and should not divert attention from our immediate tasks of coordinated investment in growth and compatible national and regional regulation of the financial markets.”