G20: Bank "supervisors" proposed
By Marie-Christine Bonzom for Swissinfo
World leaders have laid the foundation for reforms to the international financial system at the G20 summit in the United States.
One reform in particular could change the workings of Switzerland's biggest banks, UBS and Credit Suisse: the plan for new supervisory bodies to oversee the activities of leading banks.
The summit conclusions adopted on Saturday in the US capital identify around 50 different areas for action. But the outcome was not the "reinvention of the international financial system" envisaged by French President Nicolas Sarkozy and the European Union.
There had been speculation that the gathering would become Bretton Woods II, following on from the 1944 conference that created the International Monetary Fund (IMF) and the World Bank.
The issues it did address ranged from the regulation of speculative investment funds, so-called hedge funds, to the coordination of national tax incentive measures.
Responding to the summit outcome, the Swiss foreign ministry announced it hoped to take part in future talks on the decisions taken and had written to US counterparts informing them of Switzerland's desire to be involved.
More supervision
The summit's 12-page final conclusions focus particularly on improving international cooperation, a goal that would include the creation of "supervisory colleges" - bodies comprising representatives of regulatory authorities - in order to "strengthen supervision" for all major cross-border financial institutions.
The idea is that the largest banks would confer regularly with their supervisory colleges about their activities and evaluate the risks they face. No banks were mentioned by name in the summit conclusions but according to the US government, which is behind this measure and the concept of supervisory colleges, it would encompass the world's 30 biggest banks.
Swiss foreign ministry spokesman Roland Meier said the government had noted the summit conclusions with interest, adding: "We hope that the major financial centers are integrated into this process."
He dismissed Switzerland's non-invitation to the summit, despite being one of the world's major financial centers, as simply "a matter of policy".
A first step
"It was a productive and successful summit," said US President George Bush, who welcomed in particular the G20 feeling that capitalism and free trade, together with some regulation, were the best means of ensuring growth, employment and poverty reduction.
Bush and the other G20 leaders stressed however that the Washington summit was just a first step. They instructed their ministers to draw up detailed proposals in the 50 areas for action by 31 March, before a possible second summit in April. More specifics about the supervisory colleges are not expected to surface until the spring.
By that time US President-elect Barack Obama will have had three months to become familiar with the intricacies of power and the economic crisis.
On Saturday Bush said he would update his successor on the summit decisions. The outgoing president has also promised to "work tirelessly" for the smooth transition between his government and the incumbent.
President-elect Obama, who was represented at the summit by two emissaries, including former Secretary of State Madeleine Albright, has said the global economic crisis requires an international response.
New era
The only concrete result of the summit came when Japan announced a loan of US$100 billion to the IMF to help developing countries that are struggling because of the global crisis.
Welcoming Japan's "leadership" and "commitment towards multilateralism", IMF boss Dominique Strauss-Khan said he hoped that other countries would now support the work of the IMF.
It was the first time that the G20, a group formed in 1999, gathered at the level of heads of state and government. The event emphasized not only the seriousness of the current crisis but also the growing importance of emerging economies such as China, India or Brazil.
It also confirms the advent of the European Union as a full partner in the international community. In this regard, German Chancellor Angela Merkel spoke on Saturday of a "beginning of a new era" in international cooperation.
Nevertheless, the president of the World Bank, Robert Zoellick, warned that the integration of emerging countries should not come at the expense of the poorest countries.
"This is a positive step to see the leaders of developed countries meeting those of emerging economic powers, but the poorest developing countries should not be ignored," he said.
He added that "the current crisis is not resolved and long-term solutions will not be implemented by accepting a world that runs at two speeds."