Europe urges Asia to back global financial reform at Beijing summit

BEIJING, Oct. 23 Kyodo - The head of the European Union said Thursday he hopes that an Asia-Europe summit to be held this week will agree in principle to an overhaul of the global financial system to help avert future economic crises.

European Commission President Jose Manuel Barroso told reporters on the eve of
the two-day Asia-Europe Meeting summit in Beijing that Asia must be part of any
attempt to reform the way financial markets are governed and supervised.
''We need Asia to be on board and more particularly countries like China and
India (and) countries that we will meet here like Japan. We need a critical
mass of players to devise a system of global financial governance that is
adapted to the challenges of the 21st century,'' he said. ''It's very
simple...we swim together, or we sink together.''
Barroso said if Asian nations back calls for reform the process of how to
overhaul global financial institutions will begin with discussions at an
economic summit of the world's major nations to be hosted by U.S. President
George W. Bush in Washington on Nov. 15.
''The latest events have made clear that the current model of financial
regulation and supervision needs to be revamped at an international level, so I
hope our Asian partners will contribute to this reform of the international
financial system based among others on the principles of transparency,
responsibility, cross-border supervision and global governance,'' he said.
Barroso said the current economic crisis had been triggered by subprime
mortgage bad debts in the United States, but he indicated that other ''global
economic imbalances'' had also contributed to the problem, including some
nations holding huge cash reserves, an apparent criticism of China.
''That is one of the reasons why China has a role to play in this new financial
order,'' he said.
China has already indicated that it is in favor of some type of reform of
global financial institutions and governance.
Vice President Xi Jinping told a forum of European and Asian business leaders
Wednesday that new systems of financial controls and supervision need to be
introduced to avert the debt and excessive risk taking which prompted the
current crisis.
''It is crucial to strike a balance between innovating financial products and
supervising financial institutions, (to) establish a financial warning
mechanism and carry out substantial financial cooperation,'' he said, according
to a transcript of his speech posted on the summit website.
Officials and leaders from 43 countries, plus representatives from the European
Commission and the Association of Southeast Asian Nations, are attending the
Beijing summit on Friday and Saturday.
The global financial crisis is likely to dominate the agenda, but the meeting
will also discuss climate change, energy policy and sustainable development.
Leaders will also hold a series of bilateral meetings on the sidelines of the
summit, including discussions on Friday between Japan, China, South Korea and
members of ASEAN.
Japanese government sources have told Kyodo News that it is highly unlikely
that the summit will yield any significant breakthroughs on how to tackle
climate change as the focus of the meeting will be directed at the global
financial crisis.
Among the heads of state attending the meeting are Japanese Prime Minster Taro
Aso, French President Nicolas Sarkozy and German Chancellor Angela Merkel.
The first Asia-Europe Meeting was held in Bangkok in 1996 as a way of forging
closer political and economic ties between governments on the two continents.
The event is held every two years, with the last summit held in Helsinki in
Finland.
==Kyodo