Specific proposals on how to tackle the global financial crisis should be taken forward by G8 finance ministers when they meet in Japan next month, said British Prime Gordon Brown's spokesman Michael Ellam.
Speaking ahead of today's meeting between the leaders of Britain, France Germany, Italy and EU Commission President Jose Manuel Barroso, Ellam denied leaders were effectively powerless to stop the credit crunch.
"I think you would have to accept that it doesn't seem unreasonable for the leaders of the major European economies to come together on an informal basis at a time like this to discuss the common problems that they face," he said.
"This (meeting) follows a meeting of finance ministers of European G8 countries earlier this month, there will be another meeting of G8 finance ministers next month and obviously it's for finance ministers to take forward the detail and specific proposals."
British Prime Minister Gordon Brown is hosting French President Nicolas Sarkozy, German Chancellor Angela Merkel and Italy's Romano Prodi, who is appearing in a caretaker role after resigning as prime minister last week, against a backdrop of falling stock markets and the problems at banks Northern Rock PLC and Societe Generale.
On the agenda will be issues including the role of banks in the world economy and calls for greater transparency in the wake of the instability triggered by the crisis in the US sub-prime mortgage market, particularly off-balance sheet risks faced by banks.
Ellam yesterday said he expected the group to "take forward some of the issues that were raised in the UK/France/Germany joint declaration on financial markets agreed at Lisbon (last October)".
In that document, the three states called for more disclosure on securitised debt products in the wake of the sub-prime lending crisis in the US.
They also demanded more assessment of illiquid assets "and their significance for risk management".
The declaration also stated that recent financial turmoil revealed liquidity management, treatment of off-balance sheet vehicles and the identification of risks to stability were "inadequate and insufficiently transparent".
Other topics to be considered include valuation of "complex financial instruments", the liquidity practices of financial institutions, "possible weak points in the risk management of special purpose entities" and institutional investors and the role of ratings agencies.
Sarkozy on Sunday said the financial system had "lost sight of its purpose", denouncing operations which can produce "gigantic profits" as well as "gigantic losses" in a few hours.
France and Italy are calling for banks to be supervised on a European level and tighter controls of credit rating agencies, while Britain and Germany want a more flexible approach.
Ellam added that sovereign wealth funds would also be on the agenda for tomorrow's summit. Brown said on his recent visit to China and India that these funds were welcome to invest in Britain as long as they obeyed UK laws on transparency.
© Thomson Financial News
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