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Berlin Summit (February)

Volume 488: debated on Tuesday 24 February 2009

I attended a Summit in Berlin on 22 February hosted by Chancellor Merkel for the Leaders and Finance Ministers of the EU countries who will attend the London Summit in April, the ECB President, the Eurogroup Chair and the Governor of the Bank of England. I was accompanied by my right hon. Friend the Chancellor of the Exchequer.

We agreed on the need to take decisive action to stabilise the global economy, to secure jobs and growth for the future. We need to support our financial systems and get lending moving to business and households, working together to maximise benefits and minimise the impact of these actions on competition.

Across Europe countries have adopted comprehensive fiscal, monetary and structural measures to support the economy and to secure growth and employment. We agreed on the need for common principles to minimise the impact of the measures we are taking, to support the economy on competition, and to deal with impaired assets in our financial systems.

We agreed on the urgent need to increase the resources available to the international financial institutions to sustain global demand, to protect the poorest, and address the impact of the financial crisis on emerging markets, including at least a doubling of resources for the IMF to $500 billion. We expressed our concern at the growing impact of the global financial crisis on the banking sectors in central and eastern Europe and the need for the EU to take a lead in addressing it.

We agreed to work together to strengthen our financial systems:

all financial institutions should be subject to appropriate oversight or regulation, including hedge funds. Regulation must be on the basis of what institutions do and the risks they pose, not on what they call themselves;

credit rating agencies should be subject to mandatory registration and oversight;

we need decisive action against tax havens and unco-operative jurisdictions including the need to set up a list of unco-operative jurisdictions and a toolbox of sanctions. We cannot allow the world economy to be distorted by regulatory havens and tax havens;

financial institutions must pay their employees in a way that does not contribute to excessive risk-taking. We asked the Financial Stability Forum to move quickly to produce principles for all countries to follow to make incentives more transparent and closely linked to sustainable business growth;

we should agree a charter of principles on financial regulation;

we should establish supervisory colleges for cross-border financial institutions to improve international co-operation on financial oversight.

We agreed we need to reform the IMF and Financial Stability Forum to provide early warning systems, and set out a clear timetable in London for reforming the governance of the international institutions to reflect the changing world economy. We must continue to work for an ambitious agreement on climate change in Copenhagen.

We are resolved that global problems need global solutions. We need a global new deal to aid the recovery of the world economy and a set of principles for a sound economic future.

We will work together in the run-up to the London Summit to make sure that by our co-operation and our determination to act together we can not only inject the confidence that is necessary in the world economy but also build anew the economic activity that is necessary for the jobs, for the security that the people of the world want.