“Our economies are being hit very hard,” Mr. Bush said at the conclusion of the rare weekend gathering of the leaders of the world’s industrial and emerging economies, which was called to engineer a response to the wide-ranging financial crisis rippling through world markets.
“Our nations agree that we must make the financial markets more transparent and accountable,” President Bush said. He said the gathered leaders had made progress toward adapting their financial systems “to the realities of the 21st century.”
The group issued a lengthy statement after Saturday’s meeting in Washington, which detailed a series of future steps toward renewed regulation and monitoring of financial markets.
“We must lay the foundation for reform to help ensure that a global crisis, such as this one, does not happen again,” the leaders said in the statement.
Should the proposals be carried out, they could represent a significant shift in how financial institutions and regulatory bodies are operated.
“We agreed that a broader policy response is needed, based on closer macroeconomic cooperation, to restore growth, avoid negative spillovers and support emerging market economies and developing countries,” the draft text said, according to the Associated Press.
Due to the global nature of the financial markets, “intensified international cooperation among regulators and strengthening of international standards, where necessary, and their consistent implementation is necessary to protect against adverse cross-border, regional and global developments affecting international financial stability,” the statement reads.
The plan endorses an early warning system for problems such as the unbridled speculation that fed the U.S. housing bubble. It calls for the creation of “supervisory colleges” of financial regulators from many nations to better identify risky investing and other problems.
Among the reform principles the group agreed to: strengthening transparency, enhancing sound regulation, promoting integrity in financial markets, reinforcing international cooperation and reforming international financial institutions.
Details of the proposals will be left to be hammered out before the leaders meet again on April 30, leaving many key decisions to the new administration of President-elect Barack Obama.
Mr. Obama did not attend the summit, instead sending former Iowa Rep. Jim Leach, a Republican, and former Secretary of State Madeleine Albright, a Democrat, to represent him.
A divisive issue amid the talks was whether all nations should move together to enact government spending plans to stimulate their economies, the AP reported. The leaders supported the benefits such a plan, but stopped short of a pledge for all to act at the same time, as some Europeans had supported.
The role of a slumping U.S. housing market and soured mortgage-related assets in setting off the economic crisis was addressed in the group’s statement by directing blame at some “advanced countries.”
“Policy-makers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions,” text of the statement reads.
In his remarks after the summit, President Bush said the United States has had to make bold moves to prevent the country from possibly falling into “a depression greater than the Great Depression.”
“Those of you who have followed my career know that I’m a free-market person,” Mr. Bush said in explaining the difficulty in deciding to intervene in the financial sector.
“Whatever we do, whatever reforms are recommended, we need to be guided by this simple fact: that the best way to solve our problems and solve the people’s problems is for there to be economic growth. And the surest path to that growth is free-market capitalism,” the president said.
The G-20 leaders emphasized the importance of keeping free-trading flowing, especially crucial during periods of economic stress that tend to lead to protectionist measures.
“We have reached important conclusions today about trade, about financial stability and about the expansion of our economies,” British Prime Minister Gordon Brown said.
Chinese President Hu Jintao called for “a new international financial order that is fair, just, inclusive and orderly,” including “increasing the representation and say of developing countries” in international organizations such as the International Monetary Fund, according to the Washington Post.
Along with India and Brazil, export-heavy China was among the top emerging economies represented at the meeting. Already in position to become a world financial power, China recently enacted its town $586 billion economic stimulus plan to soften the blow of the recent financial upheavals.
In their communique, the leaders opened the door to evaluating the resources and initiatives of both the IMF and the World Bank, key lenders to the developing world.
French President Nicolas Sarkozy, the first European leader to call for the meeting, said he was heartened that leaders could come together on a plan for action despite such diverse interests from individual nations, the AP reported.