Mini-summit calls for strict financial regulation
The President of the European Central Bank this afternoon warned that there was no obvious way to restore trust in financial markets.
Jean-Claude Trichet (pictured) was speaking after talks in Berlin where UK prime minister Gordon Brown joined a German-hosted mini-summit assessing the economic crisis ahead of a major G20 summit in London in April
Mr Trichet declared: “We live in non-linear times – the classic economic models and theories cannot be applied, and future development cannot be foreseen.”
He said the absence of any clear forecast of future developments was complicating efforts to restore trust in free market mechanisms.
Mr Trichet had talks with the Czech Prime Minister Mirek Topolanek, currently holding the EU presidency, who agreed that “excessive recapitalization” of European banks by EU countries may result in re-nationalisation on a scale which could undermine the unity of the EU single market.
The summit, attended by the four EU countries which are members of the G8 group of richest countries – the UK, Germany, France and Italy – agreed that all financial market sectors should be regulated and strictly monitored, with early warning systems in place to signal any future impending market collapses.
The ideas, first mooted months ago as the economic crisis broke, will now be considered by G20 leaders, including US President Barack Obama, when they gather for the G20 meeting in London in early April.
“Not another round of increasing national debt, but restoration of trust of both the consumer and the financial institutions, can break the vicious circle of the European economy where lower investments reduce the demand for corporate lending,” said Mr Topolanek after the Berlin meeting.
