Asia, Europe resolve to overcome financial crisis

BEIJING: Leaders of Asia and Europe on Saturday resolved that products of financial innovation such as the ones that have resulted in the subprime crisis in United States should not be allowed to get out of hand and result in world financial crisis.
They also called for strengthening the role of the World Bank and International Monetary Fund so they can play a role in diffusing the current financial turmoil.
European Commission President Jose Barroso told a press conference at the end of the Asia Europe Meeting that the coming G-20 dialogue in Washington on November 14 will focus on finding solutions to the problem by using the feedback obtained at the ASEM.
G-20 will look at areas like strengthening the World Bank and IMF, improving financial supervision and dealing with the sharp fluctuations in the currency market.
"Leaders were of the view that to resolve the financial crisis it is imperative to handle properly the relationship between financial innovation and regulation and to maintain sound macroeconomic policy," a statement issued on the concluding day of the seventh Asia Europe Meeting here said.
"They recognized the need to improve the supervision and regulation of all financial actors, in particular their accountability," it said. There were clear indications that Asian and European nations will try to prevail upon the US government to bring about major changes in its regulatory mechanism in order to control investment banks that have played a key role in the financial crisis.
Leaders of the two continents expressed "full confidence that the crisis could be overcome through such concerted efforts". ASEM called on governments the world over to demonstrate vision and resolution and take firm, decisive and effective measures in a responsible and timely manner to rise to the challenge of the financial crisis.
"Asian and European nations are an important force to safeguard international financial stability and promote world economic growth," Chinese premier Wen Jiabao, who chaired the ASEM sessions, said. "We should make concerted effort to show the world our confidence, unity and cooperation," he said.
The IMF and other international financial institutions should bring into play their mandated role in the international financial system, to help stabilize the international financial situation, the ASEM statement said.
"Leaders pledged to undertake effective and comprehensive reform of the international monetary and financial systems," it said. Governments in Asia and Europe agreed to take quickly appropriate initiatives in this respect, in consultation with all stakeholders and the relevant international financial institutions.
ASEM leaders expressed support over US decision to convene an international summit on in Washington to address the current crisis and principles of reform of the international financial system as well as long-term stability and development of the world economy.
They also agreed to make full use of ASEM and other cooperation mechanisms to enhance information sharing, policy exchange, and pragmatic cooperation on supervision and management in the financial sector and effectively monitor, prevent and respond to financial risks to ensure sustained, stable and sound economic growth.