European finance ministers seek strategy to quell market turmoil
Finance ministers from Britain, Germany, France and Italy met on Thursday to discuss a common European strategy to confront turbulencePARIS, January 17, 2008 - Finance ministers from Britain, Germany, France
and Italy met here on Thursday to discuss a common European strategy to
confront turbulence on the financial markets.
French Finance Minister Christine Lagarde hosted the talks amid growing
concern about the fallout from the US subprime mortgage crisis that has
rattled markets since last year and cast a pall over the global economic
Lagarde, her British counterpart Alistair Darling, Peer Steinbrueck of
Germany and Tommaso Padoa-Schioppa of Italy discussed how to reach "a European
strategy on all of the main issues of international finance," a French finance
ministry official said.
After the meeting, Lagarde told reporters that the fundamentals of the
European economy were "good" and that financial and money markets were in a
process of "gradual recovery."
"We do not predict a pronounced economic slowdown," said EU Monetary
Affairs Commissioner Joaquin Almunia who also took part in the talks.
Officials said the biggest challenge for the "European four" was reaching
agreement on mechanisms to increase transparency in the markets and in the
banking sector, and perhaps even strengthening EU-wide financial regulations.
In an interview with several European newspapers, British Chancellor of the
Exchequer Darling said earlier that the financial crisis was "significant" and
required "rapid action."
The four European governments "share the objective of doing everything
possible at government level, and separately by the central banks, to find a
solution to the crisis on financial markets and prevent future crises.
"We are facing an enormous problem," he said in the interview with the
French financial newspaper La Tribune, Germany's Handelsblatt and the Italian
Il Sole 24 ore.
Thursday's talks came ahead of a meeting of heads of government of the four
countries in London on January 29 and another of the G7 finance ministers in
Tokyo on February 9.
Other than the four European countries, the G7 includes Japan, the United
States and Canada.
The International Monetary Fund warned in a report this week that the
crisis triggered by the collapse of the subprime mortgage market will likely
produce deeper problems than expected because not all market players have come
clean about their losses.
The global markets turmoil that erupted amid rising defaults on US subprime
mortgages -- home loans given to people with poor credit histories -- was in
part due to a lack of appropriate measures to evaluate the risk of new
financial products, the IMF said.
EU finance ministers had agreed in December to step up coordination between
their national financial surveillance bodies but Germany and Britain balked at
a proposal from Italy for EU-wide regulations for financial institutions.
Italy had also pressed for strengthening the role of committees grouping
financial watchdogs of EU countries.
Darling reiterated on Thursday that over-regulation would not be the answer.