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EU debates France's plans to refound capitalism

Business Materials 4 November 2008 14:16 (UTC +04:00)

A detailed French set of proposals on how to reform the global financial system was at the top of the agenda on Tuesday as European Union finance ministers met in Brussels, reported dpa.

The plans "can still be better, but it's a good start ... I think we'll turn them into European plans," Dutch Finance Minister Wouter Bos said as the meeting opened.

His Austrian counterpart, Wilhelm Molterer, backed that sentiment, saying that "some countries might judge one or another detail differently, but the direction is absolutely right."

The EU is currently trying to forge a common position on how to reform the world's financial system following the widespread chaos caused by the collapse of the United States market for poorly-backed housing loans known as subprime mortgages.

On November 15 the leaders of the world's 20 most powerful developed and emerging economies, the G20, are set to meet in Washington to discuss global reform.

EU leaders are due to meet on Friday to prepare a common stance for the summit.

"Europe has a great responsibility to take part in the creation of the new financial architecture ... It is also right that Europe should speak with one voice at a summit such as the G20, because it's a question of defining a common goal," Molterer said.

And ahead of the Friday meeting, the French government, which currently holds the EU's rotating presidency, set out an 11-point plan which it hoped that the EU and G20 meetings would endorse.

The plan calls for the G20 summit to demand, among other things, increased transparency in financial markets, the compulsory registration and monitoring of credit rating agencies, and new codes of conduct to deter top managers from taking "excessive" risks.

They should also push for the global harmonization of accounting and bank capitalization rules, closer cooperation between national regulators and "a change of culture in the governance of financial institutions towards sustainable value creation," the paper says.

However, while EU states largely support the principles underlying the proposals, some diplomats say that the French plan is too detailed to be presented to the G20 summit at this stage.

Also at the meeting, EU finance ministers are set to formally approve a 6.5-billion-euro (8.2-billion-dollar) loan to help Hungary out of its current balance-of-payments difficulties.

They are further set to meet representatives of sovereign wealth funds from Norway, Qatar and Abu Dhabi, and with finance ministers from Iceland, Norway, Switzerland and Liechtenstein.

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