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Friday, January 29, 1999 Published at 18:04 GMT

Business: The Economy

Calls for financial shake-up

Davos gets ready for the world's most important businessmen to speak

Financial leaders of the major industrial powers have called for swift action to reform the global financial system in order to avoid further turmoil across the world's markets.

Speaking at the World Economic Forum in the Swiss Alpine resort of Davos, UK Chancellor Gordon Brown called for a "decision by the summer" on a new system for "crisis prevention and resolution".

[ image: Business leaders want to make the  world's financial system more secure]
Business leaders want to make the world's financial system more secure
He said that financial leaders needed to create a global surveillance system to monitor the markets and called on the European Union, the United States and Japan to play a leading part in these plans.

His comments come in the wake of heavy criticism of how the International Monetary Fund handled the outbreak of the Asian financial crisis, which spread rapidly around the region and plunged millions of people into poverty.

Claude Smadja: IMF has created problems in world economy
French Finance Minister Dominique Strauss-Kahn echoed Mr Brown's comments. He said that the G7, the grouping of the seven most powerful industrial nations, should strengthen their co-operation to avert financial turmoil and stabilise the world's major currencies.

Tanya Beckett previews the day's agenda
However US Deputy Treasury Secretary Lawrence Summers was less enthusiastic about proposals for greater financial co-operation and the speed of any reforms.

[ image: Al Gore: Japan has to sort out its economy]
Al Gore: Japan has to sort out its economy
US Vice President Al Gore, meanwhile, called on Japan to press ahead with reforms needed to help solve the global economic crisis.

He said that the fate of the Japanese economy was crucial to the world economy. He also said that Europe, with the introducion of a new single currency, had a vital role to play to help restore confidence in the world's financial system.

Call for help

Mr Gore said: "I know that some Japanese believe we have asked for change too persistently and I recognize that there are political, cultural and social factors that must be taken into account.

"But the stakes are very high. So with due regard for the progress Japan has made, we - all the rest of us in the world - respectfully repeat to Japan, our friend and partner: please, we need your help to deal with this global economic crisis," he added.

Tanya Beckett: Strength of US economy will be questioned
Mr Gore's comments came as a senior Japanese minister told the Davos meeting that the Japanese economy is approaching the end of its crisis and is expected to bottom out in the middle of this year.

On Friday, the world's business and financial leaders are discussing the economic turmoil in Brazil and Russia.

The outlook for the world economy will dominate sessions at the second day of the World Economic Forum's 29th annual business summit.

Interest rate cuts

Other financial officials are likely to call for further cuts in interest rates to stave off an escalating recession around the world.

Another major topic of conversation will be the fall-out from the Russian financial crisis which rocked the world economy last year. The presidents of Kyrgyzstan, Azerbaijan, Ukraine and Kazakhstan will discuss how they are dealing with the crisis.

They are among 1,600 top representatives of governments, corporations and other organisations attending the business summit.

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