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EU holds financial reform summit EU 'united' on financial reforms
(about 3 hours later)
A summit of EU leaders has opened in Brussels aimed at reaching agreement on ways to reform the global financial system after the recent market shocks. A summit of EU leaders has resulted in a common position on reforming the world financial system, French President Nicolas Sarkozy says.
French President Nicolas Sarkozy, who called the talks, wants far-reaching reform proposals to take to a global summit in Washington next week. EU countries agreed on "the need to take firm and ambitious operational decisions at the Washington summit" on 15 November, Mr Sarkozy told reporters.
He wants tighter financial regulation and says the IMF should play a key role in efforts to restore stability. The Brussels talks were aimed at EU co-ordination ahead of the global summit on financial reform in Washington.
But there are strong disagreements about the degree of regulation needed. Mr Sarkozy wants tighter financial regulation and a bigger IMF role.
Mr Sarkozy believes no financial institution, market segment or territory should escape supervision, including hedge funds. As current holder of the EU presidency he pushed for the G-20 Washington summit, arguing that the world's financial system required fundamental reform in the wake of the credit crunch.
He is chairing the talks as France currently holds the EU presidency. He said Friday's discussions covered areas such as financial transparency, curbing tax havens, the activities of credit ratings agencies and "this short-term craze which is basically speculation".
But Britain and Sweden are warning that excessive regulation may stifle the financial market, while Germany is getting increasingly irritated by what it sees as France's attempts to run everything, the BBC's Oana Lungescu reports from Brussels. European governments have already committed 2.2 trillion euros ($2.8 trillion) to bank rescues to avert a financial meltdown, amid a banking crisis widely held to be the worst since the 1929 Wall Street crash. The British worry is that too much detail will tie European hands in Washington class="" href="http://www.bbc.co.uk/blogs/thereporters/markmardell/">Mardell blog: Pre-summit summit
Yet there is general support for Mr Sarkozy's call for concrete reforms to be worked out fast - within 100 days after the Washington summit on 15 November, our correspondent says. The Washington summit "must not just be a meeting where people exchange views, analyse causes… we must come up with reactions and answers to the financial crisis," Mr Sarkozy said.
He believes no financial institution, market segment or territory should escape supervision, including hedge funds. He also wants codes of conduct to avoid huge bonuses for bankers and excessive risk-taking in the financial industry.
But Britain and Sweden have warned that excessive regulation may stifle the financial market, while Germany is getting increasingly irritated by what it sees as France's attempts to run everything, the BBC's Oana Lungescu reports from Brussels.
Obama looking on
Mr Sarkozy has called for concrete reforms to be worked out fast - within 100 days after the Washington summit on 15 November, our correspondent says.
That timescale could mean US President-elect Barack Obama would be involved in the proposed reforms.That timescale could mean US President-elect Barack Obama would be involved in the proposed reforms.
Mr Sarkozy's five key proposals include the registration of credit rating agencies and codes of conduct to avoid huge bonuses for bankers and excessive risk-taking in the financial industry. He admitted that Friday's talks had been "pretty intense", with some divergences of opinion on the priorities, but he insisted that all the leaders "are convinced of the need to take economic initiatives now, following on from the financial initiatives".
Smaller EU states, whose leaders will not go to Washington, will have a chance to air their concerns on Friday. There was consensus on the need for a "different, entrepreneurial capitalism now," Mr Sarkozy said.
Room for Obama 'Not interventionist'
Mr Sarkozy says the Washington summit needs to be "a new Bretton Woods" - referring to the 1944 meeting which led to the creation of the International Monetary Fund and other global institutions. The British worry is that too much detail will tie European hands in Washington class="" href="http://www.bbc.co.uk/blogs/thereporters/markmardell/">Mardell blog: Pre-summit summit Mr Sarkozy says the Washington summit needs to be "a new Bretton Woods" - referring to the 1944 meeting which led to the creation of the International Monetary Fund and other global institutions.
He wants fundamental reform of the international financial system to ensure there can be no repeat of the global banking crisis - widely held to be the worst since the 1929 Wall Street crash. He also said he wanted Spain and the Netherlands to be included in the Washington summit.
UK Prime Minister Gordon Brown told reporters on Friday that "we've got to get the banks resuming lending".UK Prime Minister Gordon Brown told reporters on Friday that "we've got to get the banks resuming lending".
He stressed that "the key to solving this problem is not wholly the action we can take nationally, but what we can do globally".He stressed that "the key to solving this problem is not wholly the action we can take nationally, but what we can do globally".
European Commission president Jose Manuel Barroso said the European agenda "doesn't amount to interventionism".European Commission president Jose Manuel Barroso said the European agenda "doesn't amount to interventionism".
"We are not for interventionism, we are for a good performance of the markets, we are for the social economy of the markets.""We are not for interventionism, we are for a good performance of the markets, we are for the social economy of the markets."
Liberal Democrat MEP Graham Watson said: "Progress needs to be made, for example, on a more institutionalised approach to regulation. However, the danger of too much summitry is that governments begin to disagree. The conclusions of this summit should be concise and businesslike," he said.
The European Central Bank cut its eurozone interest rates by half a percentage point to 3.25% on Thursday, in an effort to prevent a recession.
Meanwhile, the Bank of England made a shock one-and-a-half percentage point cut in UK interest rates to 3%.