G-20 leaders fight downturn, mull financial system reform+

WASHINGTON, Nov. 15 Kyodo - Leaders of the world's major industrialized and emerging economies gathered
Friday in Washington to fight the sharp slowdown of the global economy amid a
financial crisis, with the host U.S. President George W. Bush vowing to work
together with the group to fix the problems that have triggered the turmoil.
At the two-day Group of 20 summit, which started with a working dinner,
Japanese Prime Minister Taro Aso called for doubling the capital base of the
International Monetary Fund, so that the Washington-based lender can better
extend support to affected emerging economies.
Bush said at the working dinner in the White House, ''We share a determination
to fix the problems that led to this turmoil. We share a conviction that by
working together, we can restore the global economy to the path of long-term
prosperity.''
Bush told chiefs of the economies, which together account for almost 90 percent
of the world's gross domestic product, the summit will focus on five
objectives.
The five are understanding the causes of the global crisis, reviewing the
effectiveness of responses each economy has taken so far, identifying
principles for reforming global financial and regulatory systems, launching a
specific action plan to implement those principles, and reaffirming that free
market principles offer the surest path to lasting prosperity.
Bush will release a joint statement of the 20 leaders after wrapping up the
landmark summit Saturday. The document could involve a to-do list for members
to overcome the turmoil.
The gathering participants are examining whether to tighten supervision of
markets and financial institutions as a way of preventing a financial crisis
from happening again.
The 20 leaders are widely expected to hammer out the principles for reform,
which would involve enhanced information disclosure, accounting rules and
practice on the part of credit rating agencies.
As a medium-term agenda item, they are also exploring reforms of existing
multilateral financial bodies such as the IMF so those entities better function
and represent the realities of the world economy.
Emerging economies now acting as an engine of growth in the world economy claim
they are underrepresented by those global financial bodies.
Aso said at the dinner that the role of the IMF should be updated to deal with
a new financial crisis and urged the Washington-based lender to boost its
support for emerging and small economies and enhance its function of issuing
early warnings against financial turmoil.
Aso then proposed that the IMF's capital base should be doubled from the
current $320 billion to $640 billion. Since it takes time to increase the
capital, the premier said Japan is ready to lend up to $100 billion as a
stopgap measure.
The Japanese leader said he expects other cash-rich countries such as
oil-producing countries in the Middle East will support Tokyo's proposal and
follow suit, according to Japanese officials.
IMF Managing Director Dominique Strauss-Kahn appreciated Aso's offer, they added.
Since the Washington conference is the first of a series of summits, the major
economies are expected to follow up on the progress in the financial sector
reform and an overhaul of the international financial bodies in later meetings.
French President Nicolas Sarkozy, a key advocate of the Washington summit, has
expressed willingness to host a second summit early next year. Aso also voiced
his intention to consider hosting the next financial summit in Japan.
At the Washington meeting, European leaders are expected to call for specific
financial reform measures to be worked out within 100 days.
The G-20 consists of the Group of Seven major industrialized countries --
Britain, Canada, France, Germany, Italy, Japan and the United States -- plus
Argentina, Australia, Brazil, China, India, Indonesia, South Korea, Mexico,
Russia, Saudi Arabia, South Africa, Turkey and the European Union.
==Kyodo
2008-11-15 22:10:51