Germany plans to host a meeting of finance ministers of 19 major industrialised and developing nations ahead of the upcoming G20 Summit in June on regulating financial markets in future.
Welcoming U.S. President Barack Obama’s financial sector reform proposals, German Finance Minister Wolfgang Schaeuble on Sunday said he plans to convene a meeting of the G20 finance ministers in Berlin ahead of the G20 summit in Canada in June.
The meeting will discuss, among other things, how to involve the finance sector in adequately sharing the costs of the present and future crisis, Mr. Schaeuble said in a newspaper interview.
Earlier, the German government said in its initial reaction that the U.S. President Barack Obama’s proposals to bar U.S. banks from risky investments and to prevent them from becoming “too big to fail” were quite encouraging for the current efforts to reform global financial markets.
The President’s proposals are a “helpful encouragement for further discussions on international level,” a finance ministry spokesman said in Berlin.
The German government continues to strive for globally-agreed solutions rather than individual nations taking their own steps. Therefore, the German government is planning to draw up its own proposals on reforming the financial markets and to present them to the G20 nations at the summit in June, the spokesman said.
Major industrialised nations have backed Mr. Obama’s plans for far-reaching reforms of the U.S. banking system.
French Finance Minister Madame Christine Lagarde praised Mr. Obama’s plan as “a very good step forward”. Asked if France would follow the U.S. lead, she said in a radio interview that “it is indeed just the other way round. I am pleased that the U.S. President is following us.”
British Prime Minister Gordon Brown is reported to be “comfortable” with President Obama’s reform proposals for the U.S. banks. “It is directionally something the Prime Minister is comfortable with,” his spokesman said in London.
The European Union’s Commissioner for Economic and Monetary Affairs Joaquin Almunia welcomed Mr. Obama’s reform plans as “more than appropriate”, but said there was no need for the EU to follow the U.S. lead.
Under Mr. Obama’s proposals, which were outlined last week, U.S. retail banks would be banned from using their own money in risky financial transactions. This would prevent them from investing in hedge funds and private equity funds and from engaging in propriety trading — investing to make profits for themselves rather than on behalf of their customers.
This was the second major initiative taken by Mr. Obama in a week to reform the U.S. banking system. On January 14, he announced a $117 billion tax on the biggest U.S. banks to recoup the money taxpayers spent in bailing out banks at the height of the financial crisis last year.