EU leaders agree on principles for financial system summit
They hope the 20 world leaders will agree a new Bretton Woods-style set of rules for financial institutions within the next three months.
This leaves the way open for the new Obama administration in the US to play the major role in trying to prevent another world crisis caused by unregulated banking practices.
Taoiseach Brian Cowen welcomed the agreement thrashed out over a long working lunch in Brussels yesterday and emphasised that it called for “proportionate and adequate regulation”.
The original French document spoke only of the need for regulation and supervision but was changed at the insistence of Germany and Britain and supported by a number of countries, including Ireland.
The agreement is not a formal document but goes further than the EU has been able to go in the past in setting out common principles for new rules.
Mr Cowen said the general principles should allow Europe to play a central role in the summit on November 15.
The approaches agreed to are:
* Rating agencies must be registered, supervised and have rules of governance.
* Apply similar accounting standards globally and ensure the fair value rule is consistent with prudential rules.
* No market, territory or financial institution should escape adequate regulation or oversight.
* Establish codes of conduct to avoid excessive risk-taking, including in systems of pay, and this should be taken into account in evaluating institutions’ risk profile.
* Give the International Monetary Fund and the Financial Stability Forum the responsibility of recommending the measures needed to restore confidence and stability.
The EU member states want a second world meeting in March to report on implementing decisions taken next week and agree proposals on the international economic architecture to improve regulation of the financial system.
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