India, Britain agree on global financial crisis remedy

August 13th, 2008 - 7:49 pm ICT by IANS  

A file-photo of P. Chidambaram
By Dipankar De Sarkar
London, Aug 13 (IANS) India and Britain have pinpointed globally regulated open markets as the way out of the current international financial crisis. The institutions best placed to devise and enforce such regulation are the World Trade Organization (WTO) and a reformed International Monetary Fund (IMF), according to a joint statement issued after a meeting in London between Finance Minister P. Chidambaram and his British counterpart Alistair Darling.

“We believe that open markets, operating through a free and fair trading regime, will be crucial for overcoming the challenges facing the global economy,” the two ministers said after the second round meeting under the UK-India Economic and Financial Dialogue.

“The recent volatility of international capital markets has once again underscored the importance of open, efficient, and transparent financial markets for sustained high economic growth and development,” they added in a joint statement issued Tuesday.

The unified posture stands in contrast to recent charges of protectionism traded between developing countries such as India on the one hand and rich nations, including the US and the European Union, on the other - particularly during the failed WTO talks in Geneva.

In their statement, Chidambaram and Darling said free and fair global trade rules combined with a reformed IMF will see the world out of the current financial downturn.

“The recent volatility of international capital markets has once again underscored the importance of open, efficient, and transparent financial markets for sustained high economic growth and development,” they said.

“Both countries agree on the need to reform the international financial institutions, and support an effective multilateral response to the global challenges and opportunities facing us.”

They highlighted the need for the IMF to work closely with the Financial Stability Forum to develop an early warning system of the threats from the international financial system to financial and economic stability.

They backed recent moves by the industry to encourage self-regulation in the financial services sector, particularly welcoming the planned launch of an International Centre for Financial Regulation in London at the end ot the year.

“We look forward to the development of voluntary guidelines by private equity and hedge funds,” the two ministers said.

Chidambaram at the World Economic Forum in Davos earlier this year had repeatedly spoke about the need for regulating the financial services industry, saying lack of regulation was partly to blame for the current financial crisis.

“A confluence of shocks - high food prices, high oil prices, and volatile financial markets - have adversely affected the global economy,” the ministers said, adding: “This global shock requires a global solution.”

Darling said Britain will “collaborate closely” to support India’s efforts to maintain momentum on key areas of financial sector reforms in the coming months.

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