Addressing the Global Crisis and Beyond: a French Point of View on the Eve of the G20 Meeting

G20 leaders were urged to pursue economic recovery and financial regulatory reform simultaneously by French Prime Minister François Fillon at the Carnegie Endowment on Monday. Addressing the symptoms of the economic crisis—insolvent banks and shattered consumer confidence—without tackling the lack of regulation that caused the crisis wastes money and risks creating a bubble of public debt. Fillon also urged the G20 to lay out concrete steps to reignite growth, stabilize ailing banks, and support developing nations at the April 2nd meeting in London.

Fillon called for a return to responsible, ethical capitalism that recognizes that the market works better with government regulation. Decisive, transparent action toward this goal is the only way to restore confidence and pave the way for lasting recovery, he argued.

Key highlights:

Increasing Transparency

• All countries must require hedge funds to register and comply with transparency regulations.
• Rating agencies like Standard & Poor’s must adopt more stringent conflict of interest regulations. They should also regularly evaluate and publish their own financial standing.
• Countries or firms that fail to cooperate with commonly accepted financial regulations should be subjected to sanctions.

Reigniting Growth

• The U.S. plan to relieve banks of toxic assets with a mix of public and private investment, announced Monday morning, is reassuring and will inspire European nations to adopt similar solutions.
• Recovery plans must be implemented rapidly.
• G20 nations must renew the commitment they made at the November summit to refrain from protectionism and ask the WTO to monitor compliance.

Institutional Reform

• International financial institutions need greater resources and more political legitimacy to speed recovery and to prevent future financial crises.
• Contributing nations should double the IMF’s current resources to help poorer nations weather the crisis.
• IMF and World Bank leaders must be chosen in an open, transparent process to increase their legitimacy. Europe is ready to renounce the current unwritten rule whereby a European heads the IMF and an American heads the World Bank, and Fillon expressed hope that the United States would follow suit.

“In the face of a crisis of unprecedented scale, we must show that we are capable of providing real answers,” Fillon concluded, “and in London, it will be our duty to achieve concrete results.”