Sat, November 15, 2008
Business > 2008 G-20 Summit

News Analysis: Establishing just, fair world financial system key to financial reforms

2008-11-15 05:16:02 GMT2008-11-15 13:16:02 (Beijing Time)  Xinhua English

BEIJING, Nov. 14 (Xinhua) -- Leaders from the Group of 20, which includes both wealthy and developing nations, are expected to meet in Washington Saturday to search ways to curb the global financial crisis.

Top on the agenda of this summit will be how to make joint efforts in tackling the crisis, reduce its impact on the world economy and avoid a future economic meltdown.

The financial crisis calls urgently for strong methods to resume credit and confidence.

The crisis did not happen overnight, but was rooted in the exiting world financial system, established by rich nations some 70 years ago. The international community has reached the consensus that working out a new, just and fair world financial system with wide participation is the only way that can lead to stable and healthy global economic development.

The crisis started from the financial turbulence in the developed countries and spread to the developing countries.

Brazilian President Luiz Inacio Lula da Silva said: "We are all paying for this adventure. This system collapsed like a house of cards that dragged down with it the dogmatic faith in the principles of nonintervention by the state in the economy."

Millions in developing nations are suffering from the worldwide credit crunch. The developing countries suffer from the reduction of foreign aid and export, their farmers are planting less and corporations are reducing output of their products.

"Foreign investment funds are withdrawing their assets in the capital markets of emerging countries to cover the losses they sustained in advanced markets," Lula said. "This loss of funds affects balance of payments and makes it difficult for companies to finance themselves."

It is predicted that the crisis will cut the growth rate of African countries by some 1.5 percent next year.

The G20 summit is an opportunity to forge new international financial regulations with the participation of both the developed and developing countries.

Respecting the voices of every country will be key to the success of the reforms of the world financial rules, analysts said.

Economists from developing countries said the exiting financial systems failed, because they failed to detect the dangers of the crisis in time and failed to prevent it from happening.

The Washington summit will be the first in a series of international meetings to debate and decide on reforms of the financial system, and it is believed that such meetings and efforts will continue after this summit.

A new framework for the world's financial system can't be drawn up without the participation of emerging economies, and the developing countries should be given greater responsibility in drafting rules to prevent future economic meltdown.

Dialogue, coordination and respecting the voice and interest of every participant should become the ways to formulate the new world financial rules.

The G20 groups Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the European Union.

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