G20 Information Centre
World Crisis Imposes New Financial Regulation
Report on the briefing by Guido Mantega, Finance Minister of Brazil
Sao Paulo, November 7, 2008
[Listen in Portuguese]
During their first meeting, held today (11/7) at Hilton, in Sao Paulo, BRIC’S Finance Ministers came to the conclusion that current financial crisis severity calls for international financial system’s reorganization and new regulation, a Bretton Woods II, in the words of Brazil’s Finance Minister, Guido Mantega.
During the press conference, Mr. Mantega gave after meeting with his BRIC colleagues, he stated that more solid rules to avoid transactions of rotten assets with healthy assets and greater control over investment funds are needed. Regarding rotten assets that contaminated healthy assets, Mr. Mantega believes this is to be blamed on rating agencies that allowed this kind of transaction.
All BRIC countries also agree that emerging countries must play a bigger role on the decisions made by the World Bank and the IMF about dealing with crises. “My proposal is to take G20 up to G7’s level, that is, it should be made up of Heads of State in lieu of Ministers and have greater share participation in these international institutions,” said Mr. Mantega. “We are willing to invest more money in the World Bank and the IMF to increase our decision-making power”.
The Minister expects the other emerging economies to agree with his proposal. He further stated that while emerging countries currently respond for 75% of world economic growth, they have very little power of decision. “We must reformulate this correlation of forces and G20 must no longer be just a reflection body”.
Mr. Mantega went on to highlight that the IMF and the World Bank could not foresee the crisis” allowing it to grow to such a magnitude that it reverberated throughout all world markets.
Mr. Mantega said that the BRIC agreed that they must have better coordinated actions and work close together for political and economic actions. “We want a new power block, more active, more efficient”. He added that the crisis can only be fought against through coordinated actions by all countries to come up with solutions.
The proposals discussed at BRIC’s meeting will be presented at the G20 meeting to be held on Saturday (11/8) and Sunday (11/9) at Hilton. The meeting is to discuss the international financial crisis and propose solutions that must be adopted to minimize risk in emerging countries.
The proposals will also be taken to G20’s first meeting in Washington on November 15. Mr. Mantega expects advanced countries to welcome the new “condition” they are demanding. In the U.S. capital, he believes that work groups can be formed to discuss the crisis, specifically about the derivatives market.
Mr. Mantega informed that emerging countries are willing to create new organizations to represent the G20. When asked about Barak Obama’s victory in the U.S., the Minister said he believes Obama has credibility and legitimacy, proven by the votes he got, to regain population’s trust in the financial system.
[back to top]
Source: Ministério da Fazenda, Brazil
This Information System is provided by the University of Toronto Library
and the G20 Research Group at the University of Toronto.
Please send comments to: email@example.com
This page was last updated September 21, 2009 .
All contents copyright © 2018. University of Toronto unless otherwise stated. All rights reserved.