UK’s Darling says govts, central banks must establish robust supervisory regime
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LONDON - UK Chancellor of the Exchequer Alistair Darling said governments and central banks must work closely together to put in place a robust supervisory regime to help ensure stability in the global economy.
Speaking ahead of a meeting on the credit crunch between Prime Minister Gordon Brown and the heads of Europe’s largest economies, Darling said it was imperative world leaders came up with the correct response to the recent turmoil in global markets. He said a significant shake-up of global financial regulation was needed as there is a much greater risk that problems caused by a bank getting into trouble in one part of the world will spread across the globe.
‘We need an adequate supervisory regime that requires greater openness, far more transparency in what banks do, and puts in place the right rules and regulations to reduce risk,’ he told BBC Radio 4’s Today programme.
Darling said global institutions such as the International Monetary Fund were not well placed to respond to modern day issues in the financial system as they were designed in the aftermath of World War II for a completely different purpose. But he stressed that any proposals the leaders come up with needs to be ‘proportionate’ and doesn’t prescribe a rule or regulation for every possible event that might occur in the financial system.
Darling also reiterated that the UK is well placed to weather an economic slowdown, and the government would take whatever action was needed to best support the country.
‘We have got the flexibility in our country to enable us to do that, because we have got very low debt levels, and historically low interest rates,’ he said.
Brown will meet French president Nicolas Sarkozy, Angela Merkel, the German chancellor, Italian premier Romano Prodi and European Commission president Jopse Manuel Barrose this evening.
They are expected to to come up with a series of proposals on financial market transparency and new arrangements for credit rating agencies, which they will put forward at next week’s meeting of the Group of Seven industrial powers in Tokyo.
Filed by Egor Ouzikov under Macroeconomic Policy