September 5, 2009
France tells G20 finance ministers it will cap bankers’ bonuses
~snip
Today, the finance ministers will conclude their talks at the Treasury. They have a good deal of ground to revisit.
Yesterday, the French resisted measures proposed by Britain and America to force banks to increase the amount of capital they hoard as a cash cushion for difficult times.
Timothy Geithner, the US Treasury Secretary and Mr Darling want firm commitments in place by the full G20 summit of world leaders in Pittsburgh later this month, that will force lenders to beef up their capital requirements, raise their available cash reserves, and limit borrowing levels.
The French are unconvinced that the current rules — already in place during the banking crisis — are insufficient.
The G20 ministers will also today revisit the topic of drawing to a close fiscal stimulus packages disbursed to bail-out crisis-gripped economies.
Britain and America want a commitment from all of the G20 countries that assistance such as low interest rates, cheap central bank money, and extensive loan guarantee schemes — will remain in place until the world economy is on a surer footing. In a letter this week, the French and Germans appeared to have backed down on their keenness to push for an exit strategy.
Yesterday, Peer Steinbrueck, the German Finance Minister, said: “One cannot of course yet talk about a concrete time. That is dependent on how the economic and financial crisis develops. There are some positive signs but I myself would not be so optimistic as to say we have everything behind us already.”
Some ministers are worried that should governments withdraw their assistance too early they will undermine fragile economic recovery signs.
Guido Mantega, the Brazilian finance minister, said: “Some people have been talking about exit strategies, I don’t think now is the time. The recovery is very small. Premature exit strategies may cause “a ‘W’ in the recovery,” referring to the risk of the world economy sinking into another recession no sooner has it emerged from the last.
Jean-Claude Trichet, the President of the European Central Bank said: “Now is not the time to exit. But I would like to make it clear that the ECB has an exit strategy, and we stand ready to put it into action when the appropriate time comes.”
The ministers will meet again today at the Treasury.
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6822949.ece
