Britain's finance minister urges more reform of finance sector

7th September 2009, Comments 0 comments

Britain's Chancellor continues plans to reform the finance sector including controversial bonus schemes for executives and clamping down on tax havens.

London -- Britain's finance minister on Monday urged European Union nations to boost IMF resources to aid the fragile world economy, saying Britain would pledge up to an extra 11 billion dollars.

Chancellor Alistair Darling also said there should not be "any let-up in the reform of the finance sector" in the wake of the global crisis, including on the controversial issue of pay and bonus structures for executives.

Darling's comments were made ahead of a meeting of G20 finance ministers in London, before a summit of the world's biggest economies in September in Pittsburgh, which will discuss the issue of bankers' bonuses.

Writing in the Guardian, Darling said G20 world leaders agreed at the meet in London in April to boost the International Monetary Fund's available lending resources to 750 billion dollars (460 billion pounds, 524 billion euros).

"European Union countries have agreed to provide 100 billion dollars (to the IMF)," Darling said in the newspaper.

"But Europe should set an example and do more to meet the target, by committing up to 175 billion dollars - with the UK ready to provide up to an additional 11 billion dollars, taking our total contribution to over 26 billion dollars."

The Guardian said the extra funding from Britain, to help the IMF assist low-income countries recover from the crisis, would be announced Tuesday.

Darling said he still expected Britain -- suffering one of the worst recessions in decades -- to return to growth "round the turn of the year".

But risks to the global economy remain, and "Britain will continue to lead international action" to help secure its recovery, he said.

"Nor can there be any let-up in the reform of the financial sector. Every country must continue to put their banks on a sound footing," he said.

"Restoring public confidence, as well as ensuring the future stability of the sector, requires us to go further on pay and bonuses."

He added: "Banks have to realise that the taxpayer came to their rescue for a purpose. That purpose was to get credit going again, not to fund rewards for excessive risk-taking which had such disastrous consequences."

"Bankers forget that at their peril."

Excessive risk-taking, resulting in massive bonuses for bankers, has been blamed for helping spark the global financial crisis that led to multi-billion dollar government bailouts of world banks.

Although applauding a deal between Britain and Liechtenstein, Darling said more also needed to be done to clamp down on tax havens.

Liechtenstein raised the gate on its tax-haven fortress earlier this month, making a deal enabling Britain to snare about 5,000 British accounts holders with up to 3.0 billion pounds in secret deposits.


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