Interview: G8 summit should agree on tighter financial regulation

• Source: Xinhua
• [09:19 June 30 2009]
• Comments

The Group of Eight (G8) industrialized nations should agree on a tighter global financial regulation scheme to prevent a repeat of the global financial meltdown, an Italian expert said ahead of the upcoming G8 summit next month.

"The G8 summit should set course to a new international economic order with a common set of rules and codes of conduct," Giuseppe Sacco, professor of world economic systems at Rome's Luiss University, said in an interview with Xinhua.

"It's the first time the G8 meeting opens with concrete proposal and solid foundations," said Sacco, who is also a former specialist for the Organization for Security and Cooperation in Europe.

G8 leaders will meet in Italy's L'Aquila on July 8-10 to discuss global measures on far-reaching issues such as the financial crisis, international trade, sustainable development, energy, environment, poverty and safety. Italy currently holds the G8 presidency.

"For the Italian government, the G8 summit represents a great opportunity to forge a leadership role and to increase coordination with non-G8 countries in tackling global challenges," he said.

Italian Prime Minister Silvio Berlusconi's recent meeting with US President Barack Obama in Washington "has paved the way for a new and stricter global financial regulatory system," Sacco said.

"For the first time Italy has proposed a tighter financial scheme for banking regulation with specific legal standards," he stressed.

"Berlusconi's government has had an active role in promoting consensus regarding the rules of global governance."

The summit in L'Aquila will focus on many issues but the most urgent is the economic crisis, Sacco said. "A lack of supervision triggered the economic downturn. This is why a new set of rules and values is needed."

Sacco said the Italian government can "positively contribute to the summit as it has demonstrated wisdom in the financial measures so far taken."

He warned the G8 leaders against the illusion of a "small recovery" coming from the banking system. The financial outlook is getting better but the world economy is not yet out of the tunnel, he said.

Banks are just waiting to be free again from government control in order to do as they please, he warned.

This is why the G8 summit must discuss long-term approaches to structural problems and Italy can set a good example here, said the expert.

It's very important that the industrialized nations agree to "restructure" the current global financial system, he said.

However, creating a new global financial order means updating the international monetary framework.

Meanwhile, the summit should also focus on concrete energy and environmental measures, including promoting renewable energies, to tackle climate change, he said.