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José Manuel Durão Barroso
President of the European Commission
Washington, 15 November 2008
Today we have shown unity and decisive action.
This is indeed a historic moment.
We have begun laying the foundations for a new global governance: for a global social market economy, with the European Union acting as its precursor.
There are no miracle solutions to the current crisis. But in the globalised, interdependent and open world we now live in, we can turn crisis into opportunity. That is the biggest difference between 2008 and the 1930s or the 1970s.
We have made good decisions today, which very largely reflect the ideas we have put forward for this meeting.
First, we have agreed on an action plan for the reform of the financial markets.
Second, we have agreed on the principles of new global governance, i.e. on building more inclusive, and more effective, global financial institutions.
Third, we have agreed on the need for coordinated action to stimulate the global economy.
Fourth, we have committed to openness, to rejecting protectionism, and to therefore strive to reach agreement still this year for modalities allowing a successful conclusion of the Doha round for trade and development.
We now need to act on them very quickly – and make history.
More in detail:
We have agreed principles to underpin a new global financial order that helps avoid future crises and increases protection for consumers, savers and investors. A new global regulatory architecture to ensure no financial institution or jurisdiction is outside the law. To boost transparency and to rein in excessive risk-taking and conflicts of interest.
We have also agreed to work with each other minimise the effects of the financial market turmoil on the jobs and purchasing power of our citizens.
We need a coherent worldwide approach to supporting the global real economy.
We cannot afford a descent into protectionism – history shows how that leads to penury and the risk of conflict.
Instead, we need to deliver on today's agreement to bring the Doha Round to fruition. We must tackle global trade, currency and budgetary imbalances. A key lesson from this crisis is that in the end those imbalances damage us all.
It would be obscene to consider financial markets in isolation, while hundreds of millions of people go hungry or have no access to proper medical care or education and while climate change threatens the whole world.
The financial crisis must not be an excuse to water down efforts to promote development and tackle climate change. Instead we must do more, and we must do it faster. Development and integration into world markets of our poorest countries will benefit us all. And investment in tackling climate change – through energy efficient buildings, to take one example - is a key way of creating jobs.
A word on the role of Europe.
We represent 500 million people in the world's largest trading bloc. The euro is the world's second reserve and reference currency. The EU has significant direct regulatory powers.
Europe's actions affect everybody. We will act responsibly, listen to others and show global solidarity. I am delighted others have pledged to do the same.
We have already shown unprecedented European coordination in our programme for supporting banks. We have taken rapid steps to, for example, raise deposit guarantees, bring forward proposals to reinforce capital requirements and cross border supervision, regulate credit ratings agencies and modify accounting standards.
Today there is agreement to a coordinated approach not just in Europe but worldwide. Europe will now play a full role between now and our next summit in transforming principles into practical and concerted action.
Action in areas like improving and aligning accounting standards, ensuring regulation is not pro-cyclical, reducing systemic risk from derivatives, removing perverse incentives from remuneration schemes, enhancing international supervisory cooperation, tackling financial crime.
We will be working to show our partners that the models the Commission has proposed for capital requirements and for regulation of credit ratings agencies can be adapted and adopted worldwide. We will be making detailed proposals on how the IMF and Financial Stability Forum can be reinforced in line with today's conclusions.
We need to build international institutions for the global age. These institutions must reflect the world’s economy as it is today – and that must include the emerging economies: this will be a major issue for our next summit in April.
With action I will announce on 26 November, with a view to our European summit on 11 and 12 December, we will support demand and protect jobs and purchasing power in the short-term, without risking a time bomb of debt that could destroy our economic base in the long-term.
This will be action to put us back on the path to sustainable prosperity, in particular through investment in environmentally friendly sectors and technology.
We will take action that is good for Europe and good for the world. It is action that is robust and forward looking, future driven. Most importantly, it is action for the citizens.
We are facing very important problems. But there is reason for confidence. By working together, we can do it, and we will do it.