Brown calls for a global regulator

World crisis: Chancellor urges supervisory crackdown as growth forecasts are cut

THE CHANCELLOR of the Exchequer yesterday called for the world's international institutions to join forces and establish a new global regulator for financial markets. Speaking at the Ottawa summit of Commonwealth finance ministers, Gordon Brown called for the creation of a permanent standing committee for global financial regulation.

The committee would bring together the expertise of the International Monetary Fund (IMF), the World Bank and the Basle committee for banking supervision as well as "other international regulatory groupings". It would put in place new codes of fiscal and monetary conduct, improve information flows to the private sector and find better ways of identifying systemic risk to the world's financial system, the Chancellor said.

Government sources said the proposals were one of the "main messages" the Chancellor would push in the annual IMF/World Bank meetings and at the weekend's summit of the G7 group of the world's largest industrialised nations.

In his speech yesterday, Mr Brown also argued for improved international codes on accounting standards and corporate governance, tighter control of hedge funds, and the need for greater attention to the human costs of the global financial crisis, all of which will be on his agenda at the IMF/World Bank meetings. The Chancellor reiterated that the G7 countries remained "ready to support all emerging market countries which are prepared to embark on strong, sound policies". He welcomed the decision on Tuesday of the US Federal Reserve to trim US interest rates by 0.25 points.

He said: "The vigilant action of the US Federal Reserve is designed to sustain domestic demand growth." Mr Brown stressed that, in his, view, the answer to the global crisis, was "not less globalisation, but more", a view he expressed earlier this month in a speech to Japanese bankers in Tokyo.

He argued that "a permanent retreat" into capital controls, such as those recently imposed by Malaysia, was not the right solution. Government sources said the Chancellor would be trying to drive home this message at the IMF/World Bank meetings.

Mr Brown told Commonwealth finance ministers in Ottawa: "Trying to turn the clock back by re-erecting national barriers is neither realistic nor sensible." The Chancellor argued that the existing international financial architecture was not sufficient to regulate and monitor world markets effectively.

"Recent months have exposed problems of transparency, poor risk assessment and inadequate supervision in developed countries' financial markets too. Indeed in the past week we have witnessed the vulnerability and the riskiness of some highly leveraged, speculative hedge funds," he said.

The new committee for global regulation would help address inadequacies in the understanding of relationships between financial markets and countries, inadequacies in the quality of risk assessment and gaps in the international regulatory system, Mr Brown said.

The committee could specifically address the risks posed to the international financial system by organisations such as Long-Term Capital Management, the hedge fund that last week was the subject of a $3.5bn international bail-out.

"Recent events have shown that it is particularly important that we have greater transparency of hedge funds," the Chancellor said.

Outlook, page 19

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?