ECOFIN President Kalousek takes part in meeting of G20 Finance Ministers and central bank governors

Horsham, March 14th, 2009

Czech Finance Minster Miroslav Kalousek participated in the meeting of the G20 Finance Ministers in Horsham, Britain, as the President of the Economic and Financial Affairs Council (ECOFIN).

Preparing for the key London G20 summit, to be held on 2 April, the Finance Ministers and governors of central banks discussed a joint response to the global financial and economic crisis.

At the meeting, Minister Kalousek presented the joint message of the European Union, agreed upon by the EU Finance Ministers at the ECOFIN Council meeting in Brussels last Tuesday. In their message the ministers stressed the contribution of the EU to global economic recovery, particularly in the field of international economic policy coordination, global financial market regulation based on transparency and accountability and also towards promoting a stronger role of international financial institutions.

According to the G20 Finance Ministers and central bank governors, priority must now be given to encouraging economic growth and employment. They also said they were ready to take decisive economic policy measures to help speed up the global economic recovery and bolster the financial system. Financial and monetary policy settings can boost global economy, but only coordinated efforts and consistent implementation of the measures planned can bring global economy back on a growth path.

The participants agreed that an immediate priority of the global economy is to stabilise the financial sector and to unblock the credit channel. Steps intended to reinforce credit activity include support for liquidity provision, the process of bank recapitalisation and measures regarding impaired assets (the framework for measures in this area is specified in the annex to the joint statement).

The G20 ministers and governors also made a commitment to help emerging economies and developing countries, particularly via international financial institutions, fight the consequences of the ebb of capital flows. Furthermore, they agreed to speedily and significantly increase the resources of the International Monetary Fund, this measure being expected to boost the stability of the international financial system. Also in the context of helping the world’s poorest countries, the G20 ministers and governors agreed to strengthen the multilateral development banks.

The G20 ministers and governors stated that necessary steps had been taken to implement the Washington Action Plan in the area of the global financial system and they welcomed the enlargement of the Financial Stability Forum to include all the G20 members. They also accepted the commitment to pursue reforms to strengthen the global financial system and prepared a number of recommendations for the London summit. More specifically, there is need to provide the necessary regulation and supervision over all the important financial institutions, markets and instruments (including hedge funds). In good years, financial institutions should build up sufficient “capital cushions” that can be used if necessary at a time of economic crisis. The G20 will channel their efforts towards boosting international cooperation in monitoring the global financial market, which should also be done in concert with the International Monetary Fund. The G20 ministers and governors called on relevant international bodies to take measures to continue the fight against uncooperative jurisdictions.

The next step will be the summit of G20 Heads of State or Government on 2 April in London. The EU will continue the work on its common position at the March meeting of the Spring European Council in Brussels.

Radka Kohutová,
Spokeswoman of the Ministry of Finance