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G-20 leaders prepare road map to reshape financial system

Leaders keen on setting up early warning system to halt future meltdowns

— PHOTO: PTI

FIXING FINANCES: U.S. President George W. Bush addresses the heads of G-20 states at a White House dinner in Washington on Friday. Prime Minister Manmohan Singh is at right. The summit is being held to discuss the steps needed to tackle the global financial crisis.

WASHINGTON: The world’s 20 top economies reached a deal on Saturday to better regulate global financial markets and take steps to halt a global economic slide.

Negotiators agreed on a final declaration on Saturday morning during the first-ever summit of the Group of 20 (G-20) nations in Washington, Deutsche Presse-Agentur has learned.

Leaders will sign the agreement later on Saturday, promising to close all gaps in financial regulation. That includes regulating hedge funds and boosting transparency of some of the complicated mortgage-related securities created by financial firms, which have been blamed for sparking the current financial crisis.

Deadline

Finance Ministers have been given a deadline of March 31 to hammer out the specifics in 50 different areas, followed by another summit of the G20 leaders at a later date, according to the declaration.

A high-level French official said a final five-page communique to be released later on Saturday would stress three principles: stimulus efforts; reform of financial regulation; and changes to global governance.

The following are some of the principal points, culled from various sources, which could be agreed by the G-20:

*A detailed action plan is to be drawn up with a series of measures and regulations setting clear deadlines, and with work set to be completed by March 31, 2009.

*A new summit will be convened before the end of April to review progress, although the location has not yet been disclosed.

*There is likely to be a call for better regulation of the financial system, and reforming those areas which have shown to be vulnerable.

*There could be moves to boost spending to spur global growth.

*World leaders could commit to coordinating their economic stimulus plans to enable governments to synchronise tax and spending initiatives.

*There will be support for the International Monetary Fund and for development banks for countries most exposed to global economic crisis. Japanese Prime Minister Taro Aso has proposed doubling funds to the IMF.

*U.S. President George W. Bush said he wanted the meeting to commit to the principle that the free market system was the best way to ensure prosperity.

*But French President Nicolas Sarkozy has declared that “laissez-faire capitalism is over” as banks crippled by toxic mortgage assets are forced to turn to government aid.

*In a separate move, Japan, China and South Korea have already agree to consider increasing the size of bilateral currency swap arrangements among the three countries.

Bush’s warning

Mr. Bush, hosting the talks, warned against a relapse into trade protectionism as Wall Street’s financial hurricane blows far and wide.

Following what he called a “frank discussion” among the leaders over dinner on Friday,

Mr. Bush told reporters early on Saturday: “One of the dangers during a crisis such as this is that people would start implementing protectionist policies. I am pleased that we’re discussing a way forward to make sure that such a crisis is unlikely to occur again.” — DPA, AFP

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