Some ‘Independent’ Financial Advice for G8 Leaders

G8

The Days of Recklessness Must End.

As Italy plays host to the worlds most powerful leaders at this year’s G8 summit in L’Aquila, ‘high on the agenda will be a redesign of the rules under which the global economy functions in order to prevent a repeat of last autumn’s financial meltdown. Russia and China have signaled their intention to push for an agreement on an alternative to the Dollar as a global reserve currency, as their fears grow that their vast accumulations of US assets are at risk of losing value. In such discussions America might well raise its long-standing complaint about China’s policy of manipulating its currency to keep its exports cheap, something which played a key role in destabilizing the global economy. However, it’s very unlikely that there will be a dramatic announcement on either of these two fiendishly complex and politically sensitive issues at the end of the summit. But it is right that they are, finally, being discussed at such meetings. Talks on a new global regulatory framework for banks might be more fruitful given that most of the governments represented have been badly scarred by the implosion of their financial sectors. There is already a general agreement that commercial banks need to be forced to hold more capital in good times to prevent them from needing costly public bailouts in the bad. A commitment from the G8 to require their domestic banks to do so would send a useful signal to the global financial community that the days of recklessness must end. But this must not be another G8 meeting of broken promises. If the name of L’Aquila is to be associated with something other than a natural disaster, these leaders need to deliver more than another communique of warm words and good intentions.’

This post is an excerpt of an article that originally appeared in the Independent newspaper online, which you can read in full here … http://tinyurl.com/m2ocen

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