G20 leaders vow to fix financial system; keep watch on markets (Lead)

November 16th, 2008 - 4:21 am ICT by IANS  

Washington, Nov 16 (IANS) Pledging to fix the global financial system, leaders from the world’s 20 biggest economies, including Indian Prime Minister Manmohan Singh, have called for greater oversight of financial markets and more efforts to bolster national economies.In a statement released at the conclusion of a historic summit here Saturday they pledged to arrest the damage wrought by the global financial crisis by taking all steps necessary to stabilise the financial system based on five common principles.

They also agreed to meet again by April 30, 2009 by when their host US President George W. Bush would have handed the charge of world’s largest economy to president-elect Barack Obama.

“There was a common understanding that all of us should promote pro-growth economic policies,” said Bush.

Obama did not attend the summit saying there can be only one president at a time. But Bush assured the participants that his successor had been kept fully in the picture and he was determined to ensure a seamless transition.

Obama sent former US secretary of state Madeleine Albright and Jim Leach, a former Republican congressman from Iowa as emissaries to meet foreign delegations.

Montek Singh Ahluwalia, deputy chairman of the Planning Commission, and the Indian Sherpa for the Summit, was among those who met the Obama team.

Among the actions to be taken in the near term were additional measures to help stimulate demand. Such moves could take the form of interest rate cuts by central banks around the globe, as well as greater funding for developing countries struggling under the weight of the crisis.

There was also a call for regulators to improve oversight for the credit rating agency industry and take swift action to minimize the risk from the giant and largely unregulated market of credit default swaps - complex financial instruments whose proliferation some say poses a great danger to financial stability.

“Over the past months our countries have taken urgent and exceptional measures to support the global economy and stabilize financial markets,” the G-20 declaration said.

“These efforts must continue. At the same time, we must lay the foundation for reform to help to ensure that a global crisis, such as this one, does not happen again.”

Earlier, seeking a global response to the financial crisis, Manmohan Singh called for a multi-pronged response to arrest the deepening recession and avoid another one in future. “Since the crisis is global, it calls for a co-ordinated global response and this summit is, therefore, timely,” he said.

Among the measures suggested by Manmohan Singh were a coordinated fiscal stimulus to mitigate the severity and duration of the recession, special initiatives to counter the shrinkage of capital flows to developing countries and a reform of the global financial architecture to prevent similar crises in future.

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