U.S. President Barack Obama arrived in London on his first visit to Europe since assuming office two months ago to meet with G20 leaders to forge unity on how to tackle the worst economic crisis since the Great Depression of the 1930s, reports say.
On the eve of the G20 summit, he will hold a series of bilateral meetings in the British capital Wednesday with Gordon Brown, the British prime minister, and the presidents of China and Russia.
Obama, who wants member-states to pump more money into programs aimed at kick-starting their respective flagging economies, is expected to present a raft of proposals, including increased oversight for hedge funds and more powers to deal with troubled financial firms deemed too big to fail.
European Union President Mirek Topolanek recently described the U.S.'s gigantic stimulus approach as a road to hell, and several other European countries asserted they couldn't afford a huge stimulus effort.
France and Germany have said that greater regulation of the financial markets is the more pressing need in the run-up to Thursday's conference of major economic powers.
The world expects that we rebuild, together, a new form of capitalism, better regulated, with a greater sense of morality and solidarity, French President Sarkozy said in a commentary released by his office Wednesday. This crisis is not the crisis of capitalism. On the contrary, it is the crisis of a system, which has drifted away from the most fundamental values of capitalism, he added.
China's president Hu Jilntao also called for sweeping reforms to be made to the world financial system, as well as action to prevent trade protectionism.
The international financial system should undergo necessary reforms in an all-round, balanced, gradual and effective manner to prevent a similar crisis in the future, he was quoted as saying by the official Chinese news agency Tuesday.
Meanwhile, World Trade Organization (WTO) Chief Pascal Lamy has reminded leaders of their commitment over protectionism, and urged G-20 leaders meeting in London Wednesday to take a firm stand against protectionism to prevent low-intensity actions from snowballing into a major confrontation.
The WTO stated last week that there were significant slippages towards protectionism since January despite pledges made by world leaders at an earlier G20 meeting to refrain from measures that hurt trade.
As the crucial meeting of the economic powers get underway, the G20 heads are expected to agree on a coordinated oversight of the global financial sector. Apart from countries putting in place stimulus packages and fixing their financial systems to get lending flowing again, Washington says it is eyeing measures to avoid protectionism and minimize the spread of the crisis to emerging markets and other developing countries.
G20 leaders are also expected to embrace a host of institutional reforms, including expanding the financial services forum to all the G-20 members, and reforming some of the international financial institutions and the way that those are managed.
Earlier, White House officials said the meeting was set to finalize a new set of rules for oversight, transparency and conduct for offshore tax havens to overhaul the regulatory structures.
On the regulatory reform track, there is a long list of items that the leaders will be focusing on, Michael Froman, deputy national security adviser for international economic affairs, said.
Besides bringing hedge funds under the oversight umbrella and encouraging offshore tax havens to sign on to international standards of conduct, Froman was expecting agreement on a set of rules or principles around capital and capitalization of financial institutions to prevent crises and to forge co-operation among regulators and supervisors cross-border.
Given the widely-held perception abroad that the U.S. might seek to impose its own agenda on the deliberations, Froman said, the U.S. was going to the summit to listen and to lead by example.
He listed the U.S. stimulus plan, financial stability program and regulatory reform agenda laid out by Treasury Secretary Timothy Geithner last week as significant steps on each of the elements of the overall agenda.
U.N. Panel Backs New Global Currency Reserve
Ahead of the G20 London summit, a United Nations panel of economists has called on the Group of 20 nations to deliberate on fundamental reforms in the global financial system, and proposed a new global currency reserve that would take over the U.S. dollar-based system being used for decades by international banks.
The proposal follows the controversial call by China's central bank governor, Zhou Xiaochuan, to create a new world currency reserve to replace the greenback as part of an overhaul of global finance, considering the deep and prolonged economic crisis facing the world community.
China and many developing countries blame the present global crisis on U.S. mishandling of over-extended mortgage loans and investments.
With Washington also borrowing trillions of dollars, it risks hyperinflation, which would considerably weaken the dollar. An independently-administered reserve currency could operate without conflicts posed by the U.S. dollar and keep commodity prices more stable.
Meanwhile, U.N. Secretary-General Ban ki-Moon, who will attend the summit, has said that the new global currency is one of the issues, which will be discussed at the London meet. He added that a U.N. panel of experts had offered a lot of recommendations, including the introduction of a new global currency.
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