Global Currency and Central Bank Proposed by EU

EU leaders press US for financial overhaul

Sarkozy said there should be no taboos in the talks with his US counterpart at Camp David on Saturday, called in the wake of the global financial crisis, and should address everything from bankers’ bonuses to new roles for the IMF.

“We do not have the right to miss this opportunity for reconstructing our system of finance in the 21st century,” Sarkozy said at the end of a two-day EU summit in Brussels dominated by the financial crisis.

“We have a mandate now to discuss this with the President of the United States,” he added after the 27 EU leaders endorsed calls for an overhaul of the financial system in the wake of the turmoil on financial markets.

Sarkozy — whose country holds the EU presidency — will be accompanied by European Commission chief Jose Manuel Barroso when he makes Europe’s case at the Camp David talks.

EU leaders are leading calls for an international emergency summit, perhaps after US elections next month, to reshape the financial system while Washington has shown less enthusiasm.

“This is a crisis that comes from the United States, from the financial system in the United States,” Spanish Prime Minister Jose Luis Zapatero told journalists.

“It’s a crisis we’re going to overcome thanks to the European Union, its capacity for coordination and its capacity for leadership.”

Sarkozy said he wanted to raise a whole range of root and branch reforms in his talks with Bush including a revamp of the International Monetary Fund.

“I really do want to raise the question of the future of the IMF and its role,” he said, accusing the institution of drifting from its initial role in providing assistance for developing nations into becoming a de facto ratings agency.

British Prime Minister Gordon Brown said the world needed an international organisation capable of monitoring the global financial system and giving early warnings about potential trouble.

“I think that what we are looking for is an International Monetary Fund that is more like an independent central bank,” Brown said.

Sarkozy said issues such as big bonuses and sweeping currency reforms should also be put on the table in the run-up to the wider international summit on global finance.

While mounting pressure for an international overhaul of the global financial system, leaders took only timid steps towards increasing oversight of the sector in their own backyard.

Repeating the need for increased cross-border coordination on bank oversight, leaders agreed national supervisors should meet once a month to exchange information.

The current crisis has exposed the limits of Europe’s ability to oversee big cross-border financial groups, with supervision currently conducted mainly along national lines.

While acknowledging the need for more coordination on supervising banks across Europe’s borders, leaders resisted growing calls for a European financial sector authority to be set up.

Despite recent measures to steady stricken banks, a steep slump on global stock markets highlighted just how fragile confidence remains amid growing concerns that the world’s biggest economies are threatened with recession.

And in spite of increasingly gloomy forecasts for the European economy, leaders have no plans for launching a concerted EU stimulus plan to boost activity, said Luxembourg Prime Minister Jean-Claude Juncker.

“Who would pay for it and with what money? said Juncker, who also chairs the Eurogroup of eurozone finance ministers. “I don’t see how we could finance such a big stimulus plan.”