JOIN USTrade curbs will impede global recovery: India
The finance ministers of Brazil, Russia, India, China (BRIC) nations ahead of G-20 Finance Minsters’ conference here, said the ongoing regulatory reforms in financial sector should not restrict cross-border capital flows and investments.
A failure to do so would risk compromising on the expected recovery of the world economy. In a joint communique, they said protectionism remains a real threat to the global economy and should be avoided.
“We believe that (the) governments should work towards prompt and successful conclusions of the WTO Doha Round in a way that ensures an ambitious, comprehensive and balanced outcome,” they said.
Talking to reporters after a meeting of BRIC nations, Finance Minister Pranab Mukherjee said in the name of financial reforms, protectionism should not be allowed to creep in.
The BRIC quartet of Brazil, Russia, India and China at their ministerial summit called for reforms in international financial governance for a stable and balanced world economy.
Shift in voting power
They stressed the need for reforms in international financial institutions, proposing a shift in voting power at the IMF and the World Bank in favour of the developing countries.
US Treasury Secretary Tim Geithner this week set out reform principles that would include limits on the amount of money a bank could borrow relative to its capital — known as simple leverage ratios. His plan could also force banks to raise more capital in the form of common equity.
UK Chancellor of Exchequer Alistair Darling signalled broad support for Geithner’s proposals. “We agree with the Americans that, across the world, banks do need to strengthen their capital positions,” the Financial Times quoted him as saying.
But French Finance Minister Christine Lagarde said changes recently proposed to capital rules for banks — known as Basel II — should be enough to ensure lenders hold a satifactory level. “As revised, I would have thought that addressed the issue,” she said.
Lagarde said France would like to see bankers’ bonuses at the heart of the reform discussions. “Individual compensation is the key to determining tbe behaviour of people in trading rooms and we need to address that to get to the root of the problem”.