International financial situation – European G8 members’ summit – Statements made by M. Nicolas Sarkozy, President of the Republic, during his joint press conference
International financial situation – European G8 members’ summit – Statements made by M. Nicolas Sarkozy, President of the Republic, during his joint press conference
Paris, 4 October 2008
Ladies and gentlemen,
We’ve reached agreement. I’m briefly going to present the decisions we took, each of my colleagues and friends will talk for a few minutes about the matters discussed, then each of us who took part in this meeting will answer a question.
Here are the decisions we’ve taken.
First, we made a point of pledging, as heads of State and government, to support the banking and financial institutions faced with the crisis. Every government will act as it sees fit and with its own resources, but in coordination with the other European States. In a way, we’ve established a doctrine.
Secondly, in the event of government support for an ailing bank, every Member State present at this meeting promises that chief executives of failing institutions will be penalized and that shareholders will also bear the cost of the government intervention.
Thirdly, given the exceptional nature of the economic and financial circumstances, the European Commission will have to show flexibility in applying the rules on both State aid to businesses and single market principles – and in these areas it will have to take decisions as fast as possible given the urgency.
Fourthly, similarly, application of the Stability and Growth Pact will have to reflect the exceptional circumstances we find ourselves in, in line, moreover, with the relevant provisions in the Pact.
Fifthly, to put the European banks on the same footing as their international competitors, the heads of State and government are asking for mark to market accounting rules for assets to be adjusted to take account of the time the banks have held them.
The Commission on its side and the accounting standardization bodies on the other will have to work as a matter of urgency so that the issue is resolved by the end of the month.
We also looked at the medium term. We are calling for the earliest possible international summit with the States most concerned on rebuilding the global financial system on new foundations. This will be on the basis of the following principles: all the financial market players, and not just the commercial banks, will have to be regulated or supervised. In practice, this means including the rating agencies, investment banks and hedge funds. Secondly, accounting and prudential standards will have to be revised to prevent the creation of speculative bubbles when things are going well and liquidity crises, like those we’ve been experiencing, when things are going badly. The systems for remunerating market traders and executives will be revised to prevent them from encouraging excessive risk-taking in order to combat what’s sometimes known as "short-termism".
Stronger political control will be exercised over the different international institutions responsible for regulating the markets and setting accounting and prudential standards to ensure consistency.
Finally, we are asking for the establishment, in times of crisis, of a task force of supervisors, central banks and finance ministries. (…)
Let me add that I’m going to answer a question you haven’t asked me. It’s very important, in the face of a global crisis, for Europe to exist, respond. It’s very important for us to respond to the emergency. Which is what we’re doing. And for us all together to commit to calling for a summit so that in the future the same causes don’t produce the same effects. (…)
And then there’s the future – the next few weeks or months. We want to lay the foundations of an entrepreneurial capitalism and not speculative capitalism. We want transparency. We want higher moral standards. We want the creation of value. We want people to have confidence. And in fact, after the Bretton Woods agreements 60 years ago, we want a new world to emerge from this crisis. So that at least out of all this, out of all these problems, we succeed in making an opportunity to build something people will have confidence in. (…)./.