World leaders call for new financial rules

October 24, 2008 12:00:00 AM PDT
Seeking a common approach to the global financial turmoil, Asian and European leaders called for new rules guiding the global economy and a leading role for the International Monetary Fund in aiding crisis-stricken countries.

The 43 nations participating in the Asia-Europe Meeting summit reconvened for a second day of meetings in China's capital Saturday, a day after adopting a statement calling on the IMF and similar institutions to help stabilize struggling banks and shore up flagging share prices.

"Leaders agreed that the IMF should play a critical role in assisting countries seriously affected by the crisis, upon their request," the statement said.

Assembled leaders also agreed to "undertake effective and comprehensive reform of the international monetary and financial systems," the statement said.

The document is one of the strongest endorsements yet for a leading role in the crisis for the Washington-based fund, long known as the international lender of last resort. It appears to mark a step toward an Asian-European consensus ahead of next month's crisis summit of the world's 20 largest economies in Washington.

Countries as varied as Hungary, Ukraine, Iceland and Pakistan have already turned to the IMF for help amid their liquidity crunches.

On Friday, French President Nicolas Sarkozy said Asian and European nations need to take a unified front to the Washington meeting.

"Europe would like Asia to support our efforts and would like to make sure that on the 15th of November, we can face the world together and say that the causes of this unprecedented crisis will never be able to happen again," Sarkozy said in remarks to the opening ceremony of the Asia-Europe Meeting in Beijing.

The biennial gathering, known as ASEM, has no mandate to issue decisions, and participants differ widely on their views toward international cooperation and intervention by global bodies. Free-trading Singapore and economic powerhouse Germany are attending, along with isolated, impoverished Myanmar and landlocked, authoritarian Laos.

Responses to the crisis have so far varied. While the 15 euro countries and Britain have agreed to put up a total of $2.3 trillion in guarantees and emergency aid to help banks, South Korea, China, Japan and the 10-country Association of Southeast Asian Nations have merely recommitted themselves to a $80 billion emergency fund to help those facing liquidity problems -- to be established by next June.

Asian financial systems had less direct exposure to the toxic sub-prime mortgages that are wreaking havoc on U.S. and European markets, but their export-driven economies are expected to take a major hit from a drop in exports and foreign investment. Asian stock markets were among the biggest losers amid a worldwide plunge in share prices.


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