Global leaders made headway Thursday on tackling the world financial crisis, with new clampdowns likely on tax havens and hedge funds and more funds heading to the International Monetary Fund so it can boost loans to struggling countries.Officials close to the negotiations said the Group of 20 nations could triple their funding for the IMF to $750 billion. The world financial body supports countries whose finances have been hard hit by the global slowdown, supporting their currency reserves and banking systems.
The officials, from a number of delegations, said the funds could include an overdraft facility worth some $250 billion for developing countries. They refused to be further identified because they were not authorized to speak to the media.
On financial regulation – a sticking point ahead of the gathering – two people close to the negotiations said that France and Germany had persuaded the Group of 20 leaders to back tougher language in the final statement on stronger rules to avoid a repeat of the current crisis.
Another official said the final deal will include proposals making sure companies more tightly link executive salaries to performance, a measure that reflects public outrage about the huge retention payments, bonuses and golden parachutes granted to banking chiefs before the sector collapsed.
Opening the summit in London’s east Docklands district, British Prime Minister Gordon Brown said there was strong unity among leaders upon the need for action.
“I believe that the text that has been circulated already reflects a very high degree of consensus and agreement between all of us,” Brown told his fellow leaders.
Britain’s Finance Secretary Stephen Timms said early discussions had been “lively,” but added that countries would agree on sanctions against countries who refuse to sign up to new rules on regulating tax havens.
“The era of banking secrecy is over,” Timms said.
As President Barack Obama and Brown joined other leaders at a working breakfast, protesters began gearing up for a second day of demonstrations, gathering outside the London Stock Exchange near St. Paul’s Cathedral. Riot police took up positions as well, ringing the stock exchange.
French daredevil Alain Robert scaled Lloyds of London’s high-rise headquarters as office workers below snapped photos. Robert, dubbed the French spider-man, has scaled dozens of tall structures around the world without ropes or harnesses to draw attention to global warming. He was later led away by police.
French President Nicolas Sarkozy and German Chancellor Angela Merkel have been adamant that the G-20 meeting must take concrete steps to more closely regulate banks, hedge funds and other financial institutions.
Sarkozy had previously threatened to walk out if the summit didn’t achieve a strong statement on new financial regulations, warning that he considered action on tax havens, hedge funds and ratings agencies as the absolute minimum the negotiations must resolve.
Sarkozy and Merkel want the G-20 to publish a blacklist of tax havens and announce sanctions at the end of Thursday’s meeting.
The British official said the boost to the IMF would include significant pledges from China, and in return there would be increasing efforts to give China and other emerging countries greater clout on the IMF.
Obama has acknowledged that U.S. regulatory failures contributed to the crisis in the financial system, but urged a focus on solutions, saying “we can only meet this challenge together.”
European leaders have balked at moving beyond spending measures already announced, arguing that their more generous welfare systems mean their spending levels will rise anyway as more people get benefits such as unemployment insurance.