Thursday, October 1, 1998 Published at 06:53 GMT 07:53 UK
Business: The Economy
Brown calls for international crisis action
Emeka Anyaoku: Urged G7 to act now or repent later
UK Chancellor Gordon Brown has told the Commonwealth finance ministers that an international strategy is needed to solve the global economic crisis.
"It is essential for them to co-ordinate monetary policies and deliver support so as to promote growth in the global economy."
"Poor crisis management"
In a major speech, Mr Brown blamed the current economic turmoil on five major weaknesses.
He pointed the finger at financial and economic weaknesses, underdeveloped financial sectors in emerging markets, ineffective supervision, poor crisis management, and unacceptable social protection.
"But together they expose an even more fundamental common problem," he said.
"At the root of these problems was a destabilising lack of transparency in economic policy-making right across key economic and financial indicators which in turn led to confusion and undermined market confidence."
"This was compounded by weak financial supervision, poor corporate governance, and ineffective prudential regulation, which has led some to raise questions about the speed and desirability of capital liberalisation."
"Borrowing was in many cases used to finance investment in economically unsound projects and governance in the corporate and financial sectors was often weak.
Follow the US lead
Mr Brown said he was not calling for internationally co-ordinated rate cuts, but he dropped heavy hints that other countries should follow the American lead.
In Ottawa he also presented proposals for reforming international financial institutions like the IMF and the World Bank to prevent a similar crisis ever happening again.
He said: "As Tony Blair said in New York last week, a new global framework will have to offer, at an international level, new and more sophisticated regimes for transparency, supervision, crisis management and stability similar to those which we have been developing at the national level to deal with domestic instability."
The Commonwealth finance minister's meeting is being held ahead of the annual meeting of the IMF and World Bank in Washington later this week along with a G7 finance ministers meeting.
The G7 consists of Britain, Canada, France, Germany, Italy, Japan and the United States.
The 54-nation Commonwealth consists mainly of former British colonies.
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