Britain, France, Germany and Italy tonight called for an international conference “as soon as possible” to consider sweeping reforms of the global finance system.
The move was announced after an emergency summit in Paris at which British Prime Minister Gordon Brown and the leaders of France, Germany and Italy vowed to lead the way in restoring confidence and stability in the European economy – and urged the rest of the world to do the same.
They want the international conference to be convened before the end of next month, and its task, said French President Nicolas Sarkozy, would be to revive the current finance system set up at the Bretton Woods Conference 60 years ago, which created the International Monetary Fund and the World Bank.
President Sarkozy called the three-and-a-half hour conference to bring together the four EU countries which belong to the G8 group of most industrialised countries.
But the summit’s pledges on restoring sound financial systems will be looked at again next week by finance ministers from all 27 EU member states at talks in Luxembourg.
President Sarkozy, who currently holds the EU Presidency, also vowed to continue a series of private meetings with various EU leaders to push the message that continued close cooperation is needed to regulate banks and finance houses and restore consumer confidence.
Before leaving London for Paris, Mr Brown announced a new national scheme, setting up a multi-billion pound fund available to small and medium-sized businesses facing trouble because of the global economic turmoil.
And in Paris he joined the others in insisting that member states should continue with their own national regimes of financial regulation – but overseen by the European Commission’s strict rules on fair competition and against illegal state aid.
The new UK Business Secretary Peter Mandelson today warned of a “new wave of economic nationalism” and urged EU nations to work together to restore stability to the European financial system.
He warned that unilateral action, such as Ireland’s offer to guarantee all deposits in its main banks, could “distort” the system.
Mr Mandelson told the Sunday Telegraph: “The danger of this crisis is it may spark a new wave of economic nationalism, with each country looking for a ’get out of jail free’ card. People have to realise that selective or national approaches could lead markets to look to parts of the financial system in a distorted way.”
Decisions by Ireland and Greece to guarantee all deposits were “likely to create distortions because some parts of the EU system are guaranteed and some are not,” he said.
“These policy options need to be fully thought through internationally and implemented collectively if we are to avoid an ’every man for himself’ approach.”
Mr Mandelson added: “The last year has seen the global economy move into an unsustainable position. In the last two weeks it has woken up to the gravity of the situation and the limitations on governments’ ability to reverse the situation. We are all coming to terms with the depth of the crisis.”