LONDON — Leaders of the world’s richest countries plan to shun protectionism and improve regulation at their summit this week in London, according to a draft communique of their conclusions published by the Financial Times on Sunday.
The Group of 20, describing the current financial crisis as the “greatest challenge to the world economy in modern times,” proposes to regulate hedge funds and credit rating agencies while ensuring that executive compensation policies discourage excessive risk-taking.
“We believe that an open world economy based on market principles, effective regulation and strong global institutions will ensure a sustainable globalization with rising prosperity for all,” the draft communique says.
“We are determined to restore growth now, resist protectionism and reform our markets and our institutions for the future.”
World leaders including Prime Minister Stephen Harper meet in London on Thursday.
The draft, which has no specified amounts for any of its proposals, may change then.
The Financial Times did not say where it obtained the document, but said officials confirmed it was the most recent draft.
It cited an unidentified official as saying the document is being floated by the British Treasury and that some points are open to negotiation, including stimulus packages and International Monetary Fund reforms.
The 24-point draft does not include plans for a fiscal stimulus package, which has been resisted by European countries. The report outlining the G20’s commitments says that actions already taken by governments and central banks will create 20 million jobs and increase economic growth by two percentage points.
The G20 also recognizes that the stability of developing countries is threatened by the financial crisis. It commits an unspecified amount of money to be distributed through international financial institutions for bank recapitalization, infrastructure, trade finance, debt rollover, and social support.
“We have agreed actions to meet these challenges as part of an integrated strategy that will restore confidence and ensure a lasting global recovery,” the draft said. “We are determined to ensure that this crisis is not repeated.”
The draft also discussed the importance of improving the regulation of financial systems, recognizing the importance of global co-operation.
“Future regulation and supervision must promote transparency, guard against systemic risk, dampen rather than amplify the financial and economic cycle, reduce reliance on risky sources of financing, and discourage excessive risk-taking,” it said.
In the document, the leaders also agree to meet again before the end of the year to review progress on their commitments.