French finmin, says G20 must focus on regulation

World leaders are too focused on "pouring money" into financial systems.

French finmin, says G20 must focus on regulation

World leaders are too focused on "pouring money" into financial systems and risk losing sight of a key priority for restoring confidence -- establishing sound regulation, France's finance minister warned on Friday.

In an interview with The Financial Times, Christine Lagarde suggested that countries like Britain and the U.S. were so eager to prop up their economies with fiscal stimulus packages and bailouts, they no longer saw tight regulation as a top priority.

"Because the economic situation is such, people... are more focused on stimulating growth and resuming lending -- that is those who are pouring money into their financial systems and not seeing much benefit out of it," she said.

"The sense of priority has varied a bit and my fear is that we lose sight of what is in my view the key priority for restoring confidence, which is this platform of sound and safe regulations."

Lagarde's remarks were an echo of comments made by French President Nicolas Sarkozy, who angered London last week when he said Britain had abandoned its industry, that its banks were "in a pretty much ruined state" and that Brown's efforts to stimulate consumer spending had failed.

Sarkozy's comments, made in a prime-time television interview, were splashed across the British press and embarrassed Brown. Sarkozy later said he regretted the way his words had been reported.

Lagarde said tougher global financial regulation should be the main aim of the G20 summit in London on April 2, and warned that if leaders failed to set out a fresh regulation strategy, they would be "curing the symptoms and not necessarily the illness itself."

Unlike Brown's government, which has twice bailed out the country's banks and cut value-added tax in an effort to boost consumer spending and confidence, Paris has shunned any attempts to help consumer spending and has instead focused on investment.

Lagarde also appealed for greater cooperation at a European level of state-aid policies and banking support measures.

She criticised British Finance Minister Alistair Darling -- who has also called for closer European Union cooperation in the face of the financial crisis -- for failing to discuss his financial rescue package plans with EU counterparts before making them public.

Reuters

Last Mod: 13 Şubat 2009, 12:58
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